US Electricity Generation Switches from Coal to Cleaner Alternatives

CEIC Macro Watch Global - October 30, 2014 While coal has traditionally been the leading fuel for electricity generation in the United States, in recent years the world’s second biggest electricity producer has slowly been shifting to cleaner alternatives. In 2013, coal accounted for 39.1% of total net electricity generation, ahead of other energy resources such as natural gas (27.4%), nuclear energy (19.4%), renewable energy (12.9%), and other fossil fuels (1.0%). Although coal remains the top source for electricity generation measuring 956.2 thousand GWh as of July 2014, its use has been decreasing continuously. Total net electricity generated by coal was significantly higher in 2003 at 2.0 million GWh or 50.8% of total production compared to its 2013 volume of 1.6 million GWh (39.1%). The fall in demand for coal in electricity generation can be partly attributed to the rising adoption of natural gas from the exploitation of shale gas. Net electricity generated by natural gas was 1.1 million GWh (27.4% of total) in 2013, up from 0.6 million GWh (16.7% of the total) ten years ago. As such, natural gas consumption for electric power rose to 8,337 BTU tonnes in 2013 from 5,245 BTU tonnes in 2003, while energy consumption of coal declined, consuming 16,489 BTU tonnes in 2013, down from 20,185 BTU tonnes in 2003. In addition, decreasing natural gas prices have played a part in promoting natural gas as a good alternative to coal in electricity generation. The average natural gas price for the industrial sector fell to USD 4.66/1000 Cub ft in 2013. Slightly above the figure for 2012, it still represents close to its lowest point since 2002. Natural gas prices were above USD 5.00/1000 Cub ft. between 2003 and 2011 and more than double that figure in mid-2008. However, natural gas prices rose sharply to USD 5.61/1000 Cub ft. during January 2014 from 4.98/1000 Cub ft. in the previous month, after enjoying long periods of low prices. Natural gas prices reached their 2014 peak of USD 6.55/1000 Cub ft. in February 2014 and have remained above USD 5.40/1000 Cub ft. since the start of 2014, an indication of high demand for the commodity, putting upward pressure on prices. Demand for coal is anticipated to continually decline in the coming years, also fostered by the Environmental Protection Agency’s new legislation requiring new fossil fuel-fired power plants to meet an output-based standard of carbon dioxide emission. Plans for a stricter carbon emission rule will likely divert interest to more environmentally friendly sources of energy. With the Obama administration making cleaner energy a policy aim, market players have naturally been looking into renewable energy alternatives in recent years. This can be seen by a 3.7 percentage point increase in the share of electricity generated by renewable energy sources between 2003 and 2013, led by wind power which recorded an accumulated 3.8 percentage point increase in its share of the total. By Adrian Dela Cruz Google+ Author Profile - CEIC Analyst Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription. Back to Blog
30th October 2014 US Electricity Generation Switches from Coal to Cleaner Alternatives

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