U.S. natural gas will be cheaper to burn than coal in 2024 for the first time ever, the U.S. Energy Information Administration (EIA) said in its Short-Term Energy Outlook (STEO) on Tuesday.
The use of coal to generate U.S. power has been falling versus gas for years in part because gas produces less carbon dioxide and other emissions and its comparative cost to coal has dropped, especially this year.
In 2024, spot gas prices at the U.S. Henry Hub benchmark in Louisiana will average just $2.15 per million British thermal units (mmBtu) versus $2.45 for coal, EIA said.
If correct, that would be the first time on record annual average gas prices were lower than coal prices, according to federal energy data going back to 2001. That compares with average prices of $2.54 per mmBtu for gas and $2.52 for coal in 2023, and averages of $3.62 for gas and just $2.07 for coal over the prior five years (2018-2022).
EIA said gas’ share of power generation would hold at 42% in 2024, the same as 2023, before easing to 41% in 2025. Coal’s share, however, will drop from 17% in 2023 to 15% in 2024 and 14% in 2025. The agency projected U.S. coal production would fall from a two-year low of 581.6 million short tons in 2023 to 485.2 million tons in 2024, the lowest since 1963, and 464.2 million tons in 2025, the lowest since 1962, as gas and renewable sources of power displace coal-fired plants.
EIA also reduced its forecast for U.S. coal exports by more than 30% in April and 20% in May compared with the March STEO after the Port of Baltimore was closed as a result of the collapse of the Francis Scott Key bridge. Baltimore is the second-largest export hub for U.S. coal.
The agency projected U.S. coal exports will fall from a five-year high of 99.8 million short tons in 2023 to 94.5 million short tons in 2024 before rising to 104.9 million short tons in 2025. Coal exports hit a record 125.7 million short tons in 2012.
By Scott DiSavino, Reuters
