Some of the world’s biggest polluters are finally cutting their carbon emissions. But not because they’ve suddenly decided to save the planet—it’s just in their financial interest.
In the US, CO2 emissions have fallen to 1994 levels, and president Barack Obama vows to cut them even further. But the main cause of the fall thus far has not been climate policy, but more efficient vehicles, less driving, and a shift to cheap natural gas in power plants.
Meanwhile, China and India, which together will account for the biggest share of the expected jump in emissions over the next decade, have both significantly increased local natural gas prices. That’s likely to slow the rate at which their CO2 emissions increase–by triggering more domestic gas drilling, higher imports of liquefied natural gas (LNG), and a displacement of dirtier coal in power plants as the government pushes to clean up air pollution.
As in the US, the rationale is not an aversion to climate change. In both China and India, the main reason is financial—neither the governments nor companies can afford to keep subsidizing natural gas consumption. For instance, PetroChina lost $6.8 billion in 2012 selling gas below cost.
Saudi Arabia is yet another unlikely carbon emissions reformer. It is forecast to be a big CO2 emitter over the next decade because of the dirty but cheap locally produced oil that it burns in its power plants. But if Saudi oil appetite continues to grow at its current pace, the country is projected to consume all of its oil reserves and be forced to start importing crude by 2038.
So last year, Saudi cut its oil consumption (paywall) at power stations to 700,000 barrels a day from 800,000 barrels in 2011, a 12.5% decline. Natural gas is taking up the slack. Meanwhile the country stepped up drilling for more natural gas supplies, so it can use even less oil. All of this should result in a lower CO2 emissions growth rate.
The cut in emissions from the United States, India, China, and Saudi Arabia hasn’t taken place in an environmental vacuum—an explicit rationale for China’s natural gas price increase is to clean up air pollution in its major cities.
And even as emissions are being inadvertently reduced, the big polluters are starting to more deliberately attack climate change. In the US, Obama has announced a stricter coal-consumption policy that is an explicit attack on global warming. In June, China launched a carbon-trading system that also seeks purposely to reduce carbon emissions.
So a shift to cleaner fuel is indeed an existential matter—just not always for the reasons environmentalists think.