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Energy Facts: Is the U.S. Shift from Coal to Natural Gas Stalling Out?

Time again for your Friday Energy Facts: this week, is the historic shift from coal to natural gas in the U.S. electric power sector stalling out? 

According to the latest projections from the U.S. Energy Information Administration (EIA), coal consumption in the United States electric power sector is expected to rise 52.2 million short tons (MMst) in 2013 and 9.2 MMst in 2014, eroding some of the historic declines in coal use experienced over the last two years.

U.S. coal energy consumption
U.S. coal consumption, 2011-2014 (Source: US EIA)

Total U.S. coal consumption fell by 114 MMSt in 2012, an 11.3 percent annual decline, driven by an 11.6-percent decline in coal use for electricity generation. That followed a 42.6 MMst decline in power sector coal consumption in 2011.

Low-cost natural gas was largely responsible for the decline in power sector coal use, as natural gas-fired power plants increased their output by 217 terrawatt-hours (TWh) and coal output declined 216 TWh from 2011 to 2012.
 
As gas prices rebound in 2013, some of those gains are about to be reversed.
 
EIA analysts “expect consumption in the electric power sector to increase over the forecast period as a result of higher electricity demand and higher natural gas prices, but remain below 900 MMst.”

In other words, projected increases in 2013 and 2014 are more than enough to take back the declines in coal consumption experienced in 2011. However, the sharp declines experienced in 2012 remain largely untouched, leaving projected coal consumption in 2014 well below 2011 levels.

In total, projected 2013 and 2014 increases in coal consumption will take back 39 percent of the cumulative declines experienced in 2011 and 2012.

In the longer term, EIA’s current business-as-usual projections indicate that natural gas’s inrodes into the electric power sector may be stalling out, with projected power sector coal consumption roughly flat by 2014.


Historic coal stockpiles mute impact on mining

Interestingly, U.S. coal production (e.g. mining) is not expected to rise anywhere near as much as consumption next year. EIA forecasts coal production will rise by only 8 MMst in 2013 and 13.6 MMst in 2014. 
U.S. coal energy production
U.S. coal production, 2011-2014 (Source: US EIA)
 
The reason: the U.S. power sector now has record quantities of coal stocked up for future use. 
 
The power sector currently has about 186 MMst of coal in stock, which is about 19% of total annual power sector coal consumption in 2011. In other words, they have more than 2 months of coal in stock. 
 
The increase in 2013 power sector consumption is projected to be 52.2 million short tons, so the power sector could meet that increase entirely with just 28% of their existing stocks, which would bring down stocks back into the middle of the normal historic range.
 
As a result, the projected increase in power sector coal consumption will have a muted effect on U.S. coal production.
U.S. electricity power sector coal energy stocks
U.S. power sector coal stocks, 2006-2013 (Source: US EIA)

Updated with Additional Reading:
Jesse Jenkins's picture

Thank Jesse for the Post!

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John Miller's picture
John Miller on Mar 22, 2013 7:16 pm GMT

Jesse, another factor is the spread between coal and natural gas energy costs.  The EIA projects the natural gas (NG)-coal spread will increase from $1.69/MBtu at the end of 2012, up to $2.31/MBtu at the end of 2014.  Unless the EPA passes further and very onerous coal power plant stack emissions regulations in the near future the STEO projected coal-NG energy cost spreads will continue to favor coal.

Jesse Jenkins's picture
Jesse Jenkins on Mar 22, 2013 7:19 pm GMT

That's exactly right John. The coal-gas price spread is the main driver of this shift. And it's not trending back towards coal's favor. 2012 natural gas prices were unsustainably low, as they fell below the marginal production costs for a lot of shale gas wells. Drillers pulled out of any dry gas wells (focusing only on "wet" gas wells with a petroleum co-product) and supply contracted. Exactly what economics would expect. 

Sid Abma's picture
Sid Abma on Mar 29, 2013 6:56 pm GMT

America needs to do what it can to keep electricity and energy prices as low as possible. It is only good for everyone and our economy.

There are some of the oldest coal fired power plants that are scheduled to be shut down and converted to natural gas. This also is very good for our environment as natural gas puts into the atmosphere much less in emissions. Can we convince these American utility companies to try something new? What if these converted coal to natural gas power plants could be set up not to be 40% energy efficient, not even to be 65% energy efficient, but near 100% energy efficient.

Power plants are typically recognized by the 300 to 500ft tall chimneys. These were required when these power plants were consuming coal or oil to get these dirty exhaust gases into an upper air stream. Then this dirty exhaust would be delivered by air stream to the next county or state, saving the local neighbors from these toxic emissions.                                                                             

Natural gas is a clean burning fuel. There are many homes and buildings that vent the COOL exhaust out of the wall through PVC pipe. Natural gas can be consumed very efficiently.   

Lets show America and the world that this can be done also at our natural gas power plants. The technology of Condensing Flue Gas Heat Recovery is desgned to recover the heat energy from these waste exhaust gases, making this recovered heat energy available to be utilized for other purposes. It is time to stop wasting all this heat energy.

What can we do with all this recovered heat energy? This is America!  We can make an opportunity happen!  A neighboring process facility or an algae facility could be using this recovered heat energy to create other products. With algae the cooled exhaust can even be used to provide these plants with CO2 enrichment (fertilizer) and through the proces of photosynthesis this algae will put back into our atmosphere Oxygen.  Even the WATER created during this heat recovery process can be used efficiently to make up for evaporation. This algae can be harvested and processed to become biofuels.

Imagine all these converted power plants across the country being set up in this manner. Near Zero Waste Power Plants. Quite a change fro the power plants of today that are operating.

What does it take to make this happen? It takes you to do due diligence and for yourself research is this possible, and then decide for yourself, Would this be good for America? If you believe so it will take an email or letter or phone call to someone you know who can again move this thought forward.

Is our environment important to us? Do we want to make a difference to possibly protect our environment for our grandkids and great grandkids? I myself do not want my grandkids coming to me one day saying “You knew this was going to happen, and you did nothing?”                              

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