Emissions of Carbon Dioxide in the Electric Power Sector

The electric power sector accounts for about 30 percent of U.S. emissions of carbon dioxide (CO₂), the most common greenhouse gas. Although demand for electricity is projected to increase as the economy grows and as other sectors rely more heavily on it, the amount of CO₂ emitted in producing electricity is likely to decline because that sector has relatively low-cost methods of reducing those emissions.

In this report, the Congressional Budget Office describes recent trends in CO₂ emissions in the electric power sector, changes in how electric power is produced and the reasons for those changes, and expectations for future CO₂ emissions in that sector. In particular:

• In 2021, CO₂ accounted for about 80 percent of greenhouse gas emissions; more than 90 percent of those CO₂ emissions resulted from the burning of fossil fuels to produce energy. In the electric power sector, coal-fired generation accounted for nearly 60 percent of the CO₂ emissions. The rest were almost entirely from the burning of natural gas.
• Emissions of CO₂ in the electric power sector had been growing until about 2005 but have since declined by about 35 percent. Reductions of energy-related CO₂ occurred in each of three broad sectors—electric power, transportation, and a composite of the industrial, residential, and commercial sectors. But the electric power sector alone accounted for more than 75 percent of the overall decrease.
• The downward trend in emissions related to energy is largely attributable to a shift away from coal-fired generation to natural gas–fired generation in the electric power sector. About two-thirds of the decline in CO₂ emissions in that sector has occurred because of the switch from coal to natural gas, and about one-third has come from increased generation from renewable sources, which do not release CO₂. Since 2005, coal-fired generation has declined by 55 percent. About 70 percent of that decline has been offset by increases in natural gas–fired generation, which emits about half as much CO₂ as coal. At the same time, wind and solar generation—which account for nearly all the growth of renewable generation—have together increased from less than 1 percent of all generation to nearly 13 percent. Changes in the average costs of producing power—from lower natural gas prices and cost reductions in renewable generation—have been responsible for the changes in generation shares.
• In the coming decade, emissions of CO₂ from the electric power sector are expected to decrease further, largely because of growth in renewable generation. Emissions of CO₂ in the electric power sector are projected to decline by about three-fifths by 2032, in part because of provisions in the 2022 reconciliation act (Public Law 117-169) that are expected to promote significant investment in renewable generation. The magnitude of that decline will depend on factors such as future technology costs, the price of fuel, the availability of transmission capacity, the siting of new generators and transmission lines, and the use of the financial incentives available under the act.