Tuesday, October 23, 2012

Coal is still the most important source of U.S. electricity

Coal, despite being the most polluting energy source, is still the most important source of U.S. electricity and the main reason for this is the fact that coal is still the cheapest energy option with coal prices being 3.5 times cheaper compared to oil.

Coal currently satisfies around 39% of U.S. electricity demand (August 2012 data from the U.S. Department of Energy). Many energy experts expect that coal will remain a top source for generating electricity in United States for entire century, even despite its highly negative environmental impact in form of harmful greenhouse gas emissions that cause global warming and climate change.

Why will U.S. likely stick with coal for foreseeable future? The price is of course one of the most important reasons but not the only one. The other factor is its abundance as approximately one quarter of world's total coal reserves are found within the United States. More than half of U.S. states produce coal (26), with Wyoming being the leader in coal consumption.

If we translate these coal reserves into numbers and add them in equation with the current U.S. coal consumption we can see that United States has enough coal to supply their energy needs for the next three centuries.

U.S. is the world's largest greenhouse gas emitter per capita, and the nation's heavy dependence on coal is certainly one of the main reasons that led to this scenario. In the last 40 years United States increased its coal production by more than 70%, and only in the last few years there has been a significant slowdown in building new coal fired power plants, mostly because of cheaper natural gas due to shale gas discoveries.

Coal's abundance and its cheap price tag still seem to be more important than environmental issues such as climate change and air pollution. The U.S. transition to renewable energy isn't going as fast as expected meaning that the lion's share of U.S. energy consumption is still satisfied from fossil fuels.

By the current looks of it U.S. will build natural gas fired power plants instead of coal power plants because natural gas is less polluting than coal, and also because natural gas prices have dropped significantly due to shale gas discoveries. Burning natural gas produces 45% less carbon emissions than burning coal, and this is certainly enough to push things in favor of natural gas. Natural gas already satisfies more than 30% of U.S. electricity demand, and if its prices remain low, coal could soon lose its lead in U.S. electricity generation.

Renewable energy sector will certainly require some time before being able to replace coal and other fossil fuels, not just because of its current lack of cost-competitiveness but also because of powerful fossil fuel lobbies and their large influence over politics.