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Shale Gas Knocks Out US Coal

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The American Interest

2016 is shaping up to be a year for the record books: the Energy Information Administration is anticipating that this year, for the first time ever, natural gas will displace coal as America’s largest source of electricity generation.

The EIA reports:

For decades, coal has been the dominant energy source for generating electricity in the United States. EIA’s Short-Term Energy Outlook (STEO) is now forecasting that 2016 will be the first year that natural gas-fired generation exceeds coal generation in the United States on an annual basis. Natural gas generation first surpassed coal generation on a monthly basis in April 2015, and the generation shares for coal and natural gas were nearly identical in 2015, each providing about one-third of all electricity generation.

…The recent decline in the generation share of coal, and the concurrent rise in the share of natural gas, was mainly a market-driven response to lower natural gas prices that have made natural gas generation more economically attractive. Between 2000 and 2008, coal was significantly less expensive than natural gas, and coal supplied about 50% of total U.S. generation. However, beginning in 2009, the gap between coal and natural gas prices narrowed, as large amounts of natural gas produced from shale formations changed the balance between supply and demand in U.S. natural gas markets. 

Natural gas emits just half as much greenhouse gases as coal, and far fewer of the dangerous local pollutants that can lead to the sorts of toxic smog choking China’s megacities. The fact, then, that natural gas is increasing its market share at the expense of coal is a green triumph.

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