Wall Street Journal Experts: The Market—Not Policy—Will Dictate Coal’s Future

May 27, 2014

The Market—Not Policy—Will Dictate Coal’s Future

12:02 pm ET
May 23, 2014

TODD MYERS: Whatever the EPA does about coal, there are several realities that will continue to dictate the future of coal in our energy mix.

Coal is being replaced by natural gas in the U.S. Thepercentage of electricity produced by coal in the U.S. fell from roughly 49% in 2007 to only 37% in 2012. Total electricity produced by coal fell by 25% during that period of time.

The major driver for this appears to be cost. Between 2007 and 2012, natural gas went from four times as expensive per BTU as coal to less than 1½ times as expensive. The price of natural gas was cut in half and the price of coal rose by more than 30%.

This is likely to continue. The Energy Information Administration’s (EIA) outlook for 2019indicates it believes the cost of natural-gas electricity will be 50% less expensive than coal.

By the way, even with the dramatic improvements in the production cost of photovoltaic solar, in 2019 the EIA projects it will still be twice as expensive as natural gas and 50% more expensive than wind. Solar still represents only one-tenth of 1% of our electrical supply and wind is about 3.5%. They will continue to grow, but will not be meaningful in displacing coal.

The result of this has been a significant reduction in the per capita carbon and total energy-related carbon emissions of the U.S. This occurred at a time when the economy and population grew.

Put simply, technology improvements and price competition from natural gas, not public policy, are likely to be the driving forces in the demand for coal.

Todd Myers (@WAPolicyGreen) is environmental director at the Washington Policy Center in Seattle and author of “Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment.” He also serves on the Washington State Salmon Recovery Council.

Read the article on WSJ's website here.