Power generation from coal is falling quickly. According to new figures from the US Energy Information Administration, coal made up 36 per cent of US electricity in the first quarter of 2012 – down from 44.6 percent in the first quarter of 2011.
That stunning drop, which represented almost a 20 percent decline in coal generation over the last year, was primarily due to low natural gas prices. As EIA explains, natural gas generation will climb steadily this year, while coal will see a double-digit drop by the end of 2012:
Natural‐gas‐fired generation continues to expand its share of total generation at the expense of coal‐fired generation. During the first quarter of 2012, natural gas accounted for 28.7 percent of total generation compared with 20.7 percent during the same quarter last year. In contrast, coal’s share of total generation declined from 44.6 percent to 36.0 percent over the same period.
Prices for natural gas delivered to the electric power industry fell by 7.5 percent in 2011, which contributed to a significant increase in the share of natural‐gas‐fired generation. EIA expects this trend to continue in 2012, with electric power sector coal consumption falling by 14 percent. Natural gas in the electric power sector grows by almost 21 percent in 2012, primarily driven by the increasing relative cost advantages of natural gas over coal for power generation in some regions.
EIA also projects that coal production at mines will fall by more than 10 percent this year. However, with prices falling due to an increase in secondary inventories, the agency predicts that domestic consumption may rise by just over 1 percent next year.
The US coal industry if facing major headwinds. The current drop in generation is mostly due to competition from natural gas. But there are other factors that will assist in pushing coal out of the electricity mix: An aging fleet of plants, cost-competitive renewables, new clean air regulations, and a strong anti-coal movement are working together to reduce the attractiveness of coal. Since 2010, plant operators have announced 106 retirements of coal facilities – representing 13 per cent of the US fleet, according to the Sierra Club.
The continued decline in domestic coal generation is good news for reducing greenhouse gas emissions. Carbon dioxide emissions from the fossil fuel sector are expected to decline by almost 3 per cent this year – continuing the 1.9 per cent decrease seen in 2011. Emissions from natural gas will rise by 5.5 per cent, while emissions from coal will fall by almost 12 per cent.