Gas Crushes Coal

Coal electricity declined by 12.5 percent in 2012, mostly driven by the switch to natural gas, which increased by almost the exact same amount (217 terrawatt-hours) as coal declined (216 TWh), according to new annual numbers released by the US Energy Information Administration.

Wind electricity increased as well — by about one-tenth (20.5 TWh) as much as gas. Solar increased a little more than one-hundredth as much as gas (2.5 TWh).

The figures come at a time when renewable energy advocates have claimed that wind and solar have been responsible for the big declines in coal — claims that do not stand up to scrutiny, according to a new Breakthrough Institute analysis.

Indeed, the new numbers highlight the key difference between gas and solar and wind. Where taxpayers subsidized unconventional gas exploration from 1980 to 2002 to the tune of $10 billion, natural gas in recent years has been replacing coal without subsidies.

Wind and solar, by contrast, remain almost wholly dependent on public support. Uncertainty last year over whether Congress would renew the key wind subsidy meant that less than half as much new wind will be installed in 2013 as was installed in 2012.

Where the problem for wind has been its high cost, the problem for gas is that it has become too cheap. Natural gas production slowed last year in the face of unprofitably low prices caused by overproduction.

This does not mean that subsidies for solar and wind should be cut, only that they should be reformed. Instead of subsidizing the production of electricity from the same old technologies, we need the kind of innovation that allowed natural gas to become cheaper than coal.

— Michael, Ted, Max and Alex