Throughout the 1990s, the environmental and cost advantages of gas over coal, stemming particularly from the advent of combined-cycle technology, seemed increasingly to make gas the favoured fuel for power generation. But, over the last decade and a half, gas has faced setbacks. While it continues to gain ground in the US, gas has lost market share in Europe and Asia in the face of growth in renewables, while coal has maintained its share. The choice between coal and gas, which at one time seemed clearly in favour of the latter, is becoming more complex as its environmental benefits are superseded by coal’s cost and security-of-supply advantages. With coal-to-gas switching still the largest growth opportunity for gas, competitiveness with coal will be a major determinant of its future prospects. In this, the second of two articles, we examine how this competition may play out in the years to come.
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