The Natural Gas Revolution and the Electricity Sector: The Good, The Bad, and the Uncertain
Recent advances in drilling technology have led to a substantial increase in the supply of natural gas and a commensurate reduction in natural gas prices, which, according to the US EIA, are expected to remain fairly low for some time to come. In turn, lower gas prices have resulted in a significant increase in the share of electricity produced with natural gas, coming largely at the expense of coal. Because natural gas is often the marginal fuel for electricity supply, lower gas prices tend to reduce wholesale prices in competitive markets for power posing economic challenges for renewables and for energy efficiency investments that must pass cost-effectiveness tests. The reduced reliance on coal has helped to reduce the CO2 emissions associated with electricity production, but questions remain about greenhouse gas emissions associated with natural gas extraction.