After falling by around 4.5% in 2023, emissions in advanced economies were lower than they were fifty years ago in 1973. Although emissions in this group of countries have plumbed similar lows in 2020, 1974-75 and 1982-83, there are two important differences. Firstly, in contrast with the previous temporary declines in 1974-75 and 1982-83, advanced economy emissions have been in a structural decline since 2007. Secondly, advanced economy GDP expanded by around 1.7% in 2023, compared to stagnation or outright recession in these other periods. The decline in 2023 therefore represents the largest percentage drop in advanced economy emissions outside of a recessionary period.

Nearly two-thirds of the decline in emissions from advanced economies in 2023 occurred in the electricity sector. For the first time in history, electricity generation from renewables and nuclear reached 50% of total generation in advanced economies, with renewables alone accounting for an unprecedented 34% share. Conversely, coal’s share plummeted to an historic low of 17%.

This transformation in the electricity sector has pushed advanced economy coal demand back to a level that had not been seen – outside of briefly in the Great Depression – since around 1900. Since its peak in 2007, coal demand has nearly halved. This reduction was driven by the remarkable increase in the share of renewables, which more than doubled from 16% to 34% of electricity generation during this period. Additionally, there has been significant coal-to-gas switching, with the share of natural gas in electricity generation rising from 22% to 31%.

European Union

Total CO₂ emissions from energy combustion in the European Union declined by almost 9% in 2023 (-220 Mt). While this reduction is of similar magnitude to the decline observed in 2020 during the Covid-19 pandemic, the context in 2023 differs significantly, with the European Union experiencing – admittedly weak – economic growth of around 0.7%. Clean energy growth accounted for half of the decline in emissions in 2023, and was the largest driver.

The primary driver behind this decline was the deployment of renewables in the electricity sector. For the first time, wind power surpassed both natural gas and coal in electricity generation, marking an historic milestone for the energy transition in the region. Electricity production from coal dropped by 27% in 2023, while natural gas-based electricity generation declined by 15%. The recovery of hydroelectric power from the droughts of 2022 and a partial recovery in nuclear power also played a role in reducing the reliance on fossil fuels in the power sector.

Nuclear power saw an historic fall in 2022 in the European Union, due to forced maintenance outages. Several of the reactors taken offline in 2022 were gradually reconnected to the grid in the first part of 2023, and Covid-19 related maintenance delays began to subside. However, the nuclear power fleet availability did not recover back to its 2021 level. If the EU’s nuclear fleet availability had achieved the 2021 level, an additional 70 TWh would have been generated, despite capacity retirements in some countries. This would have resulted in a further reduction of 40 Mt CO₂.

High energy prices, interest rates, weak domestic demand and strong international competition pushed down industrial production in the European Union. Reductions in the industry sector account for around 30 percent of the total annual decrease in emissions. However, the percentage fall in industry CO₂ was substantially larger than the fall in value added, and larger than the decline in the output of heavy industry goods. This indicates that beyond output declines, energy efficiency and fuel-switching played a role in reducing emissions for the industry sector in the European Union.

A mild winter in 2023 lowered energy demand in the residential and services sectors. However, the 2022 winter was already mild. Temperature variations therefore played a marginal role in emissions reduction in the region.

Some of the tensions on European energy markets receded in 2023, resulting in a decrease in wholesale energy prices from the record highs observed in 2022. However, retail energy prices continued to rise in 2023 following the lifting of some of the financial support mechanisms implemented in 2022; this effect likely contributed to some of the decline in residential energy demand.

United States

Total CO₂ emissions from energy combustion in the United States declined by 4.1% (-190 Mt), while the economy grew by 2.5%. Two-thirds of the emissions reduction came from the electricity sector.

The United States experienced a substantial shortfall in hydropower generation in 2023, which fell around 6% or 15 TWh. The United States also experienced a shortfall in wind power generation. In 2022, favourable wind conditions prevailed in key regions for wind generation across the United States. However, in 2023, partly due to El Niño, average daily wind speeds in these regions plummeted to their lowest levels of the decade. If wind conditions had been the same as 2022, 16 Mt CO₂ would have been avoided in the United States in 2023.

Despite the hydro and wind shortfalls that impacted the United States, renewables in the electricity sector reduced emissions by around 20 Mt. If poor wind conditions and poor hydro conditions had not occurred, the deployment of renewables would have reduced emissions by around 40 Mt.  

Coal-to-gas switching was the largest driver behind emissions reduction in the US electricity sector. This shift was driven by advantageous gas prices compared to coal since 2022, combined with the ongoing retirement of coal-fired power plants. While electricity generated from coal decreased by almost 20% in 2023, electricity generated from natural gas grew by 6%.

The mild winter experienced in the United States in 2023 was also a driver behind emissions reduction in the country. Milder temperatures compared to 2022 led to a notable decrease in electricity and fossil fuel demand in the residential and services sectors, contributing to 35% of the total emissions reductions from the energy sector in the United States.