Mercury Air Toxics Standards

For the first time ever, U.S. natural gas-fired power plants are routinely generating more electricity than their coal-fired counterparts, at least during the spring, summer and fall. Prior to 2015 coal held a clear lead over natural gas in power generation but last year they were neck and neck at 33% of fuel consumed for power generation according to the latest Energy Information Administration (EIA) statistics released Friday (February 26, 2016). This is partly due to tightening federal environmental rules, but another major driver is very low natural gas prices, which have been averaging below $2/MMBtu. Coal prices have been falling too as coal markets respond to stronger-than-ever competition from gas, but not enough to prevent a lot of coal-to-gas switching in the power sector. Today, we update last fall’s analysis of the death-match battle between coal and natural gas with a look at how persistently low gas prices may keep gas on top.

Natural gas has always had a yin-yang relationship with coal. When coal’s fortunes were on the rise, as they were only a few years ago, the long-term role of gas as a U.S. power plant fuel was being questioned—there simply wasn’t enough gas in the ground, some said. Now, with the shale revolution and a push to slash greenhouse gas emissions, coal is frequently portrayed in a death spiral, with gas the clear victor. But it is not that simple. Today, we examine the ongoing interplay between the electric industry’s two favorite fossil fuels, and whether coal is heading out or hanging on—and what it means for natural gas producers.