Emissions of Greenhouse Gases in the Manufacturing Sector

When producing goods, the manufacturing sector emits carbon dioxide and other greenhouse gases that cause global warming, both by burning fossil fuels and through certain industrial processes. In this report, the Congressional Budget Office provides an overview of greenhouse gas emissions in the manufacturing sector, describes historical changes in the factors that determine those emissions, presents projections of future emissions, and explains key uncertainties surrounding those projections.

• CBO estimates that the manufacturing sector was responsible for 12 percent of U.S. greenhouse gas emissions in 2021. About 75 percent of those emissions came from burning fuel to create heat, and the rest were by-products of industrial processes that transform materials into products.
• Most emissions in the manufacturing sector come from the chemical and refining industries. Those two industries accounted for 59 percent of manufacturing’s greenhouse gas emissions in 2021.
• Emissions from manufacturing were 17 percent lower in 2021 than in 2002. Between 2002 and 2019, the last year before the coronavirus pandemic, the manufacturing sector’s output increased, but its emissions intensity—that is, emissions per dollar of output—decreased. The net effect of those changes was a 15 percent decrease in emissions. Emissions then fell further in 2020 in the wake of the pandemic.
• Emissions from manufacturing are projected to increase by 17 percent between 2024 and 2050. CBO projects that growth in the output of emissions-intensive industries will lead to an increase in total emissions from manufacturing.
• Projected levels of emissions reflect projected economic growth, oil and gas supplies, and changes in technology. Changes in economic growth affect emissions by changing output from manufacturing, and changes in oil and gas supplies affect emissions because oil and gas are important inputs for manufacturing. Changes in technology—including the increased adoption of electrification, carbon capture, and hydrogen fuel—may reduce direct emissions from manufacturing over the long term, but they may also increase indirect emissions from other sectors, such as the electric power sector.