Natural gas generation matches coal for the first time in U.S. history

Source: Mollie Bloudoff-Indelicato, E&E reporter • Posted: Wednesday, July 11, 2012

The amount of electricity generated by natural gas matched coal generation for the first time in history, with each taking 32 percent of the market in April, U.S. officials say.

According to an Energy Information Administration (EIA) report, natural gas produced 95.9 million megawatt-hours, narrowly missing coal, which generated 96 million megawatt-hours. The report data are still preliminary, but even if final numbers shift moderately, the trend holds major implications for renewables, the environment and the U.S. economy.

“Cheap natural gas is bad news for every other source of electricity,” said Michael Gerrard, the director of the Center for Climate Change Law at Columbia Law School. “It’s bad for coal; it’s bad for renewables; it’s bad for nuclear.”

Analysts point to depreciated prices as a cause for the shift in markets. Natural gas values are at a 10-year low, according to the EIA.

Natural gas “is cheaper, so they’re using more, but it’s something that no one really thought would happen,” said Tyson Brown, a statistician with the EIA. “People weren’t thinking that natural gas would be as cheap as it was.”

Natural gas use has spiked simply because coal is so expensive, Brown added. Coal-fired power plants generate electricity by creating steam that spins turbines. Heating water requires massive amounts of energy, making it costly to shut the plant down for short periods of time. Thus, coal power plants generally run continuously. But this year’s mild winter reduced demand for energy, making the 24/7 schedule less cost-effective. Instead, power companies turned to an abundant natural gas supply.

Trouble for renewable energy

However, natural gas prices have decreased to the extent that, in the long term, the market may not be sustainable. Nor does this help President Obama’s push toward renewables, as it’s more difficult to make a case for green technology when inexpensive natural gas is so enticing.

“As natural gas becomes cheaper, its price advantage over renewables grows, and that would require ever-increasing subsidies or reduced costs for renewables in order for them to be competitive,” Gerrard said.

The move toward natural gas also has environmentalists on edge. While natural gas is often lauded as more environmentally friendly than coal, many consider hydraulic fracturing — a method by which gas is “mined” from the ground — to be an environmental hazard.

Methane, one of the gases emitted during the fracking process, is 20 times more powerful in warming the atmosphere than carbon dioxide.

“There are studies showing that fugitive emissions of methane [are released] both during fracking and the transmission of natural gas,” Gerrard said. “Those studies are heavily contested, but if they turn out to be true … it could wipe out the greenhouse gas advantage that natural gas has over coal.”

Either way, Luke Popovich, spokesman for the National Mining Association, said he isn’t too worried about the future of coal. The industry is counting on increased demand from both the United States and Asia as soon as the economy stabilizes, he added.

“This is a dynamic market, not a static market,” Popovich said. “The economy will improve so electricity will be in greater demand, and the price of natural gas will rise, which will make coal more attractive.”

He added: “Now, that isn’t to say that we’re anticipating half the electricity market again, as we did for some years in this past decade, but I don’t think we’ll be as low as 32 percent, either.”