Natural Gas To Surpass Coal As Source Of CO2

Natural gas is expected to soon surpass coal as a source of CO2.  As natural gas continues to replace coal as a fuel for the production of electricity for the nation’s electric grids, the total amount of emissions coming from natural gas activity will pass that of coal in 2016.

coal nat gas and CO2

Energy related CO2 emissions from natural gas are expected to exceed that of coal by 10% in 2016.  The total amount of electricity generated by natural gas reached record highs in the U.S. in July of 2016.  The nearly 5,000 gigawatts per day surpassed the previous record in 2015 by around 9%.  This was due partially to high temperatures as well as the continuing price advantage of natural gas over coal.  For the year, electricity from natural gas is expected to account for around 34% of power output compared to 30% for coal.

As ever tightening federal mandates force coal plants to either modernize or shut down, coal based electricity output has been in a multi-year down trend in the US.  This is expected to continue in the years to come. Much of this lost production has been replaced by renewable sources of power such as solar and wind.  The latter is particularly the case in Texas.

This all comes on top of another trend that has seen overall electricity sales declining thanks in part to greater energy efficiency in residential construction as well as federal energy efficiency mandates.  Lower peaks in electricity demand tend to favor cleaner sources of power. Coal and natural gas are considered more responsive sources of power generation and more likely to be ramped up in times of greater peak demand.

Electricity Rates

The gradual shift of electricity production away from coal and toward natural gas and renewable sources of power has not put upward pressure on electricity rates.  The national average for electricity for July 2016 was 13.0 cents per kwh.  By comparison, a 12 month electricity plan can be found for 6.3 cents per kwh in the Dallas, Texas area as of the time of this writing.


Have We Seen The Peak In Carbon Emissions?

The headlines may have you believing that things continue to get worse with respect to CO2 emissions.  But dispute what popular opinion thinks, carbon emissions are not continuing to go up.  History may mark 2007 as the turning point in the fight to control CO2 emissions.   According to projections by the Energy Information Administration, carbon dioxide emissions may never return to 2007 levels; at least not in the next few decades.

The reason for the drop is fairly straightforward.  Generally speaking, economic activity is an accurate predictor of emission levels.  Economic grow means more people on the roads, more manufactures burning fossil fuels, more electricity and more CO2.  The events in the financial markets in 2008 shocked the economy into a near standstill.  CO2 emissions followed the economy down.

Historic patterns would suggest then that as the economy has recovered, so too would CO2 emissions rise again.  But emission levels are not rebounding at a rate in keeping with economic growth.  This is due in large part to the macro trend toward cleaner electricity sources.

Coal has long been the foundation for electricity generation in the U.S.  Nothing else was as cheap and accessible as coal.  But this trend has reversed recently; seeing coal steadily lose its share of the U.S. electricity mix.  This is due in part to stricter environmental regulations and in part due to seemingly overnight boom in natural gas.

The switch off of coal onto cleaner energy sources is happening at a rate sufficient to keep the overall emissions levels lower despite increased energy usage due to economic expansion.

This effect is well illustrated in the state of Texas were the majority of electricity now comes from sources other than coal.  Natural gas is now the predominated source of electricity in Texas.

Texas is the nation’s largest producer of natural gas by a wide margin.  They also use natural gas extensively to generate electricity for the Texas grid which is separate from the other North American grids.  Thanks in large part to prolific new drilling techniques natural gas is the cheapest it has ever been.  The effect all this has on Texas is cheap electricity.

Aside from market competition from natural gas, coal is also being squeezed by tougher EPA regulations at the federal level and renewable energy mandates from the state level.  The combination of regulatory pressure and competition from natural gas is likely enough to make 2007 an historic turning point in the fight against carbon emissions.