EnergyFactor By ExxonMobil | Pespectives has a new home

Transitioning to natural gas ‘Much faster than expected’

Big news recently from the U.S. Energy Information Administration, whose statistics show that natural gas passed coal as the leading fuel for generating the nation’s electricity for the rolling 12-month period ending January 2016. This was followed soon after by an announcement that EIA expects natural gas to be the No. 1 fuel for U.S. power generation for all of 2016.

04052016_Feature_v5The idea that natural gas is overtaking coal for the top spot in our electricity mix – on an annual basis – for the very first time represents an extraordinary development.

For much of the past few decades, coal has been the “dominant energy source for generating electricity in the United States,” according to EIA. Through 2008, it accounted for roughly half of Americans’ electricity year in and year out, with natural gas providing about 20 percent. (Nuclear power has accounted for about 20 percent, with the balance being provided by hydropower and other renewables.)

The shale revolution – which has significantly increased volumes of cleaner-burning domestic natural gas – has dramatically re-written this narrative. Since 2008, natural gas has steadily climbed from a share of just over 20 percent to now about one-third of the U.S. electricity mix.

This is delivering profound environmental benefits, since burning natural gas to generate electric power emits up to 60 percent less CO2 than burning coal. With the shift from coal to natural gas in electricity generation, that fact helps account for the dramatic drop in energy-related CO2 emissions in the U.S. in recent years to levels not seen since the 1980s.

What is happening in the U.S. foreshadows to a degree what will happen around the globe.

According to ExxonMobil’s Outlook for Energy, by 2040 the share of global electricity generated by natural gas is expected to pull even with coal. In fact, our Outlook projects that coal will account for about 30 percent of the global electricity mix in 2040, down from about 40 percent currently.

There is another reason that these developments are so extraordinary: how quickly they are happening.

This faster-than-anticipated transition is reflected in an announcement EIA made last summer. Its headline about the April 2015 electricity stats read: “Electricity from natural gas surpasses coal for the first time, but just for one month.

Notice that “just for one month” part? It’s quite telling.

At the time, EIA considered the event an anomaly, a one-time occurrence aided by the fact that April is “traditionally the month when total electricity demand is lowest.”

Yet, with EIA’s recent announcements about natural gas overtaking coal on an annual basis, as opposed to just one month, last-year’s one-off event is now the new normal.

Consider this Washington Post headline about the most recent EIA announcement: “This huge change in how we get energy is coming much faster than expected.”

It certainly is.



  • Worth a deeper look...