Transforming U.S. Energy: The 2012 Story the Media Missed

Author: Chris Flavin
Chris Flavin is President Emeritus of the Worldwatch Instute.
  • 2012 was a year of transformation across U.S. energy sectors – transformation that has been underreported in the mainstream media.
  • In the U.S. both energy consumption and carbon dioxide emissions fell in 2012, even as the economic recovery got underway. Based off recent data, these numbers are not anomalies, but rather indicative of an emerging trend.
  • Falling prices in the U.S. have led to a boom in natural gas production. Beyond natural gas, renewable energy is the only U.S. energy source that is growing. Meanwhile, oil imports are falling. 
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Wind turbines cost 30 percent less than they did three years ago. (Joseph Lee Novack)

The recent increase in U.S. oil production after four decades of decline has attracted great excitement in the energy industry and beyond.  The International Energy Agency, projects that North America could become a net oil exporter within the next few decades.

While these developments are undeniably dramatic, they may be obscuring some other unexpected and potentially transformative changes with large implications for the U.S. economy and the global environment.  They include:

1.  U.S. energy consumption declined in 2012 for the fourth time in the last five years—even as economic recovery began to take hold.  According to preliminary Worldwatch estimates, total energy use in 2012 was a full 7 percent below the 2007 level, the steepest five-year decrease in at least 60 years.  Most of this decline results from advances in U.S. energy productivity—dominated by gains in transportation fuel economy and building efficiency.

2.  Reliance on natural gas is growing rapidly, particularly in power generation.  Falling natural gas prices, sparked by the shale gas boom, has led electric utilities to switch from  coal to gas while many manufacturing companies have been replacing oil with gas.  (Not surprisingly since gas prices averaged the equivalent of $18 per barrel in 2012 while oil hovered at $100.)  Natural gas provided the U.S. with 27 percent of its total energy in 2012, compared with just 18 percent from coal.

3.  Beyond natural gas, renewable energy is the only U.S. energy source that is growing.  Renewable resources supplied 10 percent of U.S. energy in 2012—up from 7.5 percent in 2007 (a 35 percent increase), surpassing nuclear power.  Like gas, renewable energy growth is spurred in part by falling prices—wind turbines cost 30 percent less than they did three years ago while solar electric panel prices have fallen by more than 60 percent. Supportive state and federal policies have also helped, including the renewable energy tax credits that Congress extended just after the end of the year.  Renewables surpassed natural gas and all other energy sources with 16 gigawatts of newly installed generating capacity in 2012 (the equivalent of 32 new coal plants) .

4.  U.S. oil imports have fallen by a jaw-dropping 34 percent in the last five years, and not all of the decline results from the increase in U.S. oil production.  Declining oil consumption—driven by improved efficiency—and fuel-switching from oil to gas—have also reduced imports.

5.  U.S. carbon dioxide emissions have declined by a remarkable 13 percent since 2007—following a 20 percent increase from 1990 to 2007.  Emissions of sulfur dioxide and other pollutants are similarly in decline. These encouraging environmental developments flow mainly from the reduced consumption and fuel switching described above—with an assist from slow economic growth.  President Obama’s re-election—and his commitment to tightening air pollution standards—indicate that further environmental gains may be on the way.

One thing that all of these new developments share is that they were completely missed by the scores of private and government analysts who are paid to forecast the country’s energy future. This stunning failure suggests that something fundamental has changed in U.S. energy markets—and that the new trends now in motion may well continue, and perhaps accelerate.

That’s fortunate since the U.S. energy economy is still far from sustainable. Recent rates of progress will need to continue for decades if the nation is to achieve the post-carbon, post-oil future it so badly needs.

Advancing technology—in generating electricity from the wind and sun, extracting natural gas cleanly and efficiently, and improving energy efficiency—will make this kind of energy future possible, but only if sustained political will and stronger policy frameworks are put in place.

Print/EmailChris Flavin | January 16, 2012