Remember all the stories about how a glut of cheap shale gas was killing off coal in the United States and slashing the country's carbon-dioxide emissions? It's time to revise those headlines slightly.
This shouldn't be too much of a surprise. As I've noted before, natural gas prices have been creeping up over the past year, thanks to a combination of a colder winter, higher demand for heating fuel, scaled-back drilling, and also new storage facilities that are preventing a glut of gas on the market. The ultra-low gas prices that were devastating the coal industry in 2011 and 2012 weren't sustainable forever.
So what happens now? A couple of points:
1) U.S. carbon dioxide emissions will rebound a bit as coal recovers. Here are the EIA's projections for U.S. energy-related carbon-dioxide emissions in the coming years:
The EIA projects that U.S. carbon dioxide emissions from energy will likely rise 1.3 percent in 2013 and 0.4 percent in 2014. (Note that this excludes emissions of methane, another potent greenhouse-gas that can leak from natural-gas infrastructure, though no one's sure how much is actually seeping out.)
2) That said, coal could continue to struggle. It’s important not to go overboard here. Natural gas is still more dominant than it was in 2007, thanks to the fracking boom, and it’s not vanishing. Even in the EIA’s worst-case scenarios, natural gas prices only rise to about $6 per million BTU by 2020. That might make it easier for existing power plants to burn more coal. But, according to most projections, it will still be uneconomical for utilities to build new coal-fired facilities for the foreseeable future.
What's more, new pollution regulations from the Obama administration are constraining the coal industry. By 2016, power-plant operators will have to start installing costly new emissions controls at their coal units to comply with stricter standards for sulfur dioxide, particulate matter, and mercury. One recent study from Duke’s Nicholas School of the Environment found that up to 65 percent of the coal fleet could become uneconomical as a result.
3) It will be hard to count on natural gas alone to continue to drive down U.S. carbon emissions. The United States is still quite far from the 17 percent cut in emissions by 2020 that President Obama pledged at Copenhagen:
As Trevor Houser and Shashank Mohan of the Rhodium Group put it, “Further emission reductions will require new policy, whether in the form of EPA regulation, congressional legislation (as called for in Obama’s speech), or state-level action.”
Congress isn’t likely to enact climate-change legislation anytime soon, but environmental groups have been calling on the Obama administration to use EPA regulations to drive greenhouse gases down even further. That could include restrictions on carbon emissions from power plants as well as new regulations for methane leaks from natural-gas wells and pipelines.
--Methane leaks are undermining the shale-gas boom. Here's how to fix it.
--Here's how the Obama administration could cut U.S. carbon emissions a further 10 percent without Congress. It would involve new carbon regulations for existing coal plants.