For the first time ever, gas has usurped coal as the biggest producer of electricity in the US. Analysts say Obama administration’s proposed climate change rules are likely to establish gas as the predominant source of electricity as early as 2020.

Figures released by the US government’s Energy Information Administration (EIA) show that in April, natural gas produced 31.5% of the country’s electricity and coal 30.2%.

The interregnum will not last, with coal expected to average around 35.6% of generation across 2015. But a decade ago, such an inversion was unthinkable. Americans got half their electricity from coal and just a fifth from natural gas. Now the two are neck and neck.

In April a glut of fracked gas from new shale regions drove the price of gas down to just $2.50/million Btu (British thermal unit, a widely-used measure of energy), a 35% drop since February. This oversupply, combined with a routine seasonal shut down of coal plants, caused gas production to creep above coal for the first time.

“Power generators often use the spring months to take their plants offline for maintenance, especially coal plants. This maintenance period happened to coincide with a period of very low natural gas [prices],” said Tyler Hodge who works on the EIA’s Short-Term Energy Outlook.

Hodge said gas prices were expected to rise again in the coming months, and coal would reassert itself at the top of the production table when plants fire up again for the winter.

In 2012, gas prices fell even lower and production almost overtook coal, but coal returned to dominance. “So this [gas surge] is by no means irreversible,” said Michael Obeiter, a senior associate in the World Resources Institute’s climate programme. But he said the short term fluctuations in gas price were compounding an overall drift away from coal and the trend favoured “natural gas becoming the dominant source for electricity generation in the US in the coming years.”

The convergence of coal and gas production, 2000-2015

The downfall of king coal has been just as much about the rise of hydraulic fracturing (‘fracking’), which has tapped gas from the country’s vast, shallow fields of sedimentary shale. The price of natural gas in the US was close to $15/m Btu in 2005. Plentiful, cheap, accessible gas and a friendly regulatory environment created a boom that has upended the US energy market.

But coal has been its own worst enemy. The high level of air pollution produced by its ageing fleet of power stations means many now operate outside increasingly stringent Environmental Protection Agency (EPA) rules.

“Of course the supply of gas at its current prices has been a big factor. But so too has been this administration’s relentless regulatory push against coal mining and coal power plants,” said a spokesman for the National Mining Association.

This is leading to a spate of early retirements. The EIA predicts that coal plants generating 60GW, roughly a fifth of total capacity, will retire between 2012 and 2020. In 2015, 12.9GW will be shut down, compared to 3.3GW last year.

Betsy Monseu, chief executive of the American Coal Council, said the industry had abandoned any plans to replace the retiring fleet. “Regulations, and the threat of new regulations, mean that no new coal plants are on the drawing board. This is not the case with for natural gas. Even with natural gas generation retiring, more new natural gas generation is being permitted and built.”

A recent report by energy thinktank Carbon Tracker found that meeting the EPA’s rules added 16% to the cost of building a new coal plant and 51% to its running costs.

Last month one of the coal industry’s biggest regulatory stumbling blocks, the 2012 Mercury and Air Toxics Standard, was struck down by the supreme court. But even if the decision is upheld during appeal, it is unlikely to stop the decline.

“Decisions in many cases to shut down coal units have already been made over the past three years as litigation wound its way through the courts. Electricity providers were forced to make alternate plans regarding their generation assets to ensure the ability to meet electric demand,” said Monseu.

“We see no signs that this trend from coal power to gas and renewable alternatives will change,” said Luke Sussams, senior analyst and co-author of the Carbon Tracker report. “The rise of cheap natural gas and increasingly stringent environmental regulations have crushed coal’s share of power generation in the US. The share price of Peabody Energy, the largest coal producer, has fallen by over 95% in four years as a result.”

Yet despite all of the pressures on coal, the EIA’s current assessment is that it will remain, just barely, the US’s largest source of electricity until at least 2040. However those projections do not factor in the Obama administration’s new climate change regulations, the Clean Power Plan, which aims to cut carbon emissions from power plants by 30% and are due to come into force this summer. When you do, said Monseu, you get a “starkly different picture”.

EIA analyst Laura Martin said her projections indicated the Clean Power Plan will mean gas generation will permanently surpass coal by 2020. However she said the final legislation would likely be significantly different to the draft “so there is still considerable uncertainty regarding the impacts of the CPP”.

Obeiter said the shift towards lower carbon emitting natural gas was only a half measure for creating a secure climate.

“The transition away from coal is a net win for the climate, but we can’t get complacent. Methane emissions from natural gas development undercut the climate advantage natural gas has over coal, and need to be addressed at the state or federal level. And if we are to successfully transition to a low-carbon economy, natural gas must make way for renewable energy to play a dominant role in the US electricity mix,” he said.



The shale industry has been criticised for releasing unknown quantities of methane, a much more intensive greenhouse gas than carbon dioxide, into the atmosphere during the extraction of shale gas. A 2012 study estimated that if the industry lost 3.2% of the gas produced, it could be worse for the climate than coal.

“Unfortunately, there’s not a lot of good data for methane leakage nation-wide, but it’s probably less than 3.2%,” said Obeiter. “The EPA GHG [greenhouse gas] Inventory estimates roughly 1.2% or so, but many have taken issue with their methodology.”

Martin said gas generation was initially favoured by the climate rules because it offers a way to shift rapidly away from the most carbon intensive fuel – coal.

“However, in the long run, natural gas generation remains fairly level because ... EIA’s analysis found building new renewable generation more economic than continued higher use of natural gas generation,” she said.