Proponents of natural gas, or methane in its purest form, say it is cleaner than coal and oil, lacks the PR problems and toxic waste byproducts of nuclear, and more efficiently produces electricity than sustainable sources. It is abundant and, in recent years, cheap. Is natural gas the future of energy production, a risky stop-gap measure to energy independence and cleaner energy, or simply overhyped?
Whatever your opinion on the matter, natural gas is asserting itself into the energy mix. David Crane, CEO of NRG Energy, told the WSJ’s ECO:nomics conference, “Natural gas is in the process of wiping out the coal industry, and it’s wiping out the nuclear industry quicker than we thought.”
Last year natural gas prices significantly undercut coal prices. The spread between coal and natural gas has narrowed in the beginning of 2013 as gas prices jumped. But the longer trend shows rising natural gas use in electricity generation.
30% of US electricity is now generated from natural gas compared to 16% in 2000, while coal-based electricity is down to 38% from 52% in 2000. Some of coal’s decline may be due to a 3% rise in renewables, but the nearly doubling of natural gas use is clearly a central driver.
This switch from coal to natural gas—which releases 50% less CO2 than coal when burned—may be an important reason CO2 emissions in the US fell -12% from their 2005 high to 1994 levels at the end of 2012.