Cheap natural gas made last year a terrible one for coal in the power generation markets, as coal's market share dropped from 42% in 2011 to 37.4% in 2012, a loss of nearly 5 percentage points or more than 10% decline in market share in just a year. But coal's fortunes began to improve even at the end of 2012.
At this point, gas will be the loser and coal the winner in 2013 battle for power generation market share between America's two leading sources of electricity. One result of coal's resurgence this year will be that US carbon emissions will likely increase modestly in 2013, after falling in 2011 and 2012.
While gas prices are still low, they are currently about 55 cents per thousand cubic feet higher than the average spot price for 2012, or up about 20%. The price competition between gas and coal is intense and so the reality of higher gas prices improves significantly the outlook for coal in 2013 and 2014.
In fact, EIA is now projecting that natural gas's generation market share will drop from 30.3% in 2012 to 27.6% in 2014, while coal's share will rebound to 39.1% in 2014 from 37.4%. Gas loses 2.7 percentage points of market share or about 9%, and coal gains 1.7 percentage points or about 5%. See page 9 of: http://www.eia.gov/forecasts/steo/pdf/steo_full.pdf.
A 9% drop for natural gas and 5% gain for coal underlines how sensitive this nation's generation mix is to even relatively small price changes in natural gas or coal. The question becomes, will coal's 2013 resurgence continue in 2014? Not sure. But the price of gas will largely answer that question.