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Pic-of-the-Week: Has the Shift From Coal to Natural Gas Stalled? (10/06/2014)

Has the Shift From Coal to Natural Gas in Electricity Production Stalled? Just ten years ago, coal was used to generate 50% of U.S. electricity while natural gas held only an 18% share. Toss in the shale gas revolution and move forward to early 2012 and you have both coal and natural gas producing 32% of U.S. power each. It appeared natural gas was well on its way to replacing much of the coal-fired production in the U.S.

However, our pic-of-the-week illustrates that since early 2012 the shift has taken a clear short-term breather. Coal has made a small comeback and is now closer to 40% of total production. Natural gas has eased back a bit to just under a 30% share. Is the shift from coal to natural gas over?

We doubt it. Power producers continue to favor natural gas and renewables at the expense of coal when making decisions to add or upgrade generation capacity. The regulatory environment similarly remains hostile toward coal. These factors suggest that the long-run trend toward less coal and more natural gas remains intact despite the recent slowing in the shift.

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mcsnead

Mark C. Snead is President and Economist at RegionTrack.

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