American Fossil Fuels: Diverging Paths for Coal, Oil, and Natural Gas

From 2000-2022, the United States has seen its carbon dioxide emissions decrease by 16%. During that time, the U.S. economy grew by 35% and population by 19%.

This is an impressive achievement by any measure.

But the impressive reduction hides diverging paths for the three major fossil fuels – coal, natural gas, and oil. Almost all the reductions in the United States are driven by reduced coal use. Emissions from oil use have remained roughly stable, while emissions from natural gas have increased.

Greenhouse gas emissions by fuel in the United States. https://www.c2es.org/content/u-s-emissions/

1. Coal’s decline

Coal’s decline started around the great financial crisis in 2008. One obvious cause was the economic recession, which reduced electricity demand.

For the long run, the growth in fracking for natural gas was more important. Natural gas has a lower carbon intensity than coal. Although fracking in the United States started already after the Second World War, production grew fast in the 2010s.

As natural gas priced decreased, retiring coal infrastructure was replaced with natural gas. Building new coal-fired power plants made little sense, considering that coal no longer had a cost advantage while facing significant pressure from environmental regulations.

This is significant because almost all domestic U.S. coal consumption is for electricity generation. In 2019, under 10% of all domestic coal demand was for industrial or commercial use. The rest was for the power sector.

The results are easy to see. American coal-fired power generation peaked at around two billion megawatt-hours in 2007. At that time, natural gas-fired power generation was under one billion megawatt-hours. In 2023, coal had fallen under 700 million megawatt-hours while natural gas had reached 1.6 billion.

More recently, renewable power generation has added further pressure on coal. The costs of solar and wind electricity have decreased rapidly over time. While these variable sources cannot completely replace coal without major investments in battery storage, transmission infrastructure, and other investments to handle variability, their share in U.S. power generation has grown from less than 1% to 14% between 2000-2023.

2. Two words: oil

Oil is a different story altogether. As I always remind my students, oil is not a substitute for natural gas or coal. Oil is primarily used as a transportation fuel and secondarily in industry. Coal and natural gas are used in electricity generation and industry.

Greenhouse gas emissions by end use in the United States.
https://www.c2es.org/content/u-s-emissions/

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