U.S. Economic Assumptions and Energy-Related Carbon Dioxide Emissions

Recent Economic Indicators. The STEO is based on macroeconomic projections by Oxford Economics (for countries other than the United States) and by IHS Markit (for the United States). Given the tremendous uncertainty in both the spread and severity of COVID-19 and in the policy responses, these forecasts are significantly more uncertain than normal.

The Oxford forecast projects that global GDP will contract by 2% in the first quarter of 2020 and by 0.4% in in the second quarter. However, this contraction is followed by a rapid recovery in the second half of 2020, leading to flat global GDP growth for the year.

For the United States, EIA used the March 20, 2020 version of the IHS Markit macroeconomic model with EIA’s energy prices. The resulting U.S. economic forecast, which is used in this STEO, reflects a return to growth in the fourth quarter of 2020, and an expectation that employment does not return to pre-pandemic levels by the end of the STEO forecast period.

Energy-Related Carbon Dioxide Emissions. EIA estimates energy-related carbon dioxide (CO2) emissions based on energy consumption and carbon factors, the amounts of CO2 that are released when fuels are burned, are unique to each fuel. Total CO2 emissions depend on total energy consumption and the fuel mix of the energy consumed. Coal has the highest carbon factor of the major fossil fuels. However, because more petroleum products (such as motor gasoline) are consumed than coal, petroleum is the largest source of CO2 emissions in the United States. Natural gas is the least carbon-intensive fossil fuel, but in recent years, because of its increasing consumption, it generates more U.S. CO2 emissions than coal. Non-fossil fuels, such as nuclear power and renewable generation sources, emit no direct CO2. As these noncarbon generation sources enter the fuel mix, energy demands can be met without proportional increases in energy-related CO2.