In 2024, power producers across the United States have significantly increased natural gas-fired generation, setting new records in the first nine months of the year. This surge in gas usage has solidified the country’s position as the largest consumer of natural gas globally. Since June, natural gas has supplied an unprecedented 46% of total U.S. power generation, according to data from LSEG. The rise in gas production has been driven by the need to meet growing energy demand, which has seen output increase across various energy sources.
Despite the ambitious goals of reducing fossil fuel consumption by 2030, the rapid growth of gas usage in the U.S. challenges its credibility as a leader in the energy transition. The U.S. remains the world’s top natural gas producer, and many of its key power systems show no indication of scaling back gas use in the near future. Instead, they seem likely to increase gas-fired output in the coming years. This contradiction between national energy trends and international climate pledges leaves the U.S. vulnerable to criticism from climate advocates, who are likely to call for more stringent efforts to reduce gas dependence.
In the first nine months of 2024, gas-fired power plants in the U.S. generated a total of 55.6 million megawatt hours (MWh), nearly 5% higher than during the same period in 2023, and the highest output seen since 2021. This rate of growth surpassed that of several other major gas-consuming countries, including China, South Korea, Japan, Iran, Italy, and Russia, as reported by energy think tank Ember. Among the top 10 gas-fired electricity producers, only Mexico, Qatar, and Thailand recorded faster growth in gas consumption than the U.S. in the first half of 2024. However, these countries collectively produce less than a quarter of the gas-fired electricity generated by the U.S., which increased its share of global gas-powered electricity to 30%, up from just under 29% in 2023.
The increase in U.S. gas demand can be traced to a number of power systems reducing output from coal-fired plants in efforts to cut pollution. These systems, however, struggle to meet rising power needs without relying heavily on gas-fired generation. The PJM Interconnection system, which spans Pennsylvania, New Jersey, North Carolina, and parts of the Midwest, contributes 21% of U.S. gas-fired output. The Midcontinent Independent System Operation (ISO), covering areas from Arkansas to North Dakota, accounts for around 13% of national gas-fired power, while Texas’s Electric Reliability Council (ERCOT) contributes 12%, and Florida’s system adds about 11%. Florida, in particular, saw the steepest rise in gas use, increasing by 13.4% compared to the same period in 2023. The Midcontinent and PJM systems both recorded a 3% rise in gas use, while ERCOT’s output increased by 1%, according to LSEG data.
In contrast, the SERC Reliability Corporation, which serves regions including the Carolinas, Tennessee, Georgia, and Missouri, saw gas-fired generation drop by 2.5% compared to the same period in 2023. This decline was compensated by higher output from nuclear plants and a 5% increase in coal-fired generation. However, gas remains the largest power source within the SERC system and is expected to remain a critical energy component for the foreseeable future.
Looking ahead, gas is poised to become even more important in other major U.S. power systems, particularly in areas where coal-fired plants are being phased out and must be replaced by other on-demand power generation sources. As long as coal phase-outs continue, U.S. gas-fired power generation is likely to keep rising, regardless of national-level goals to reduce fossil fuel-based energy production. Only when clean power generation, particularly from renewable sources, reaches much higher levels and is supported by substantial battery storage infrastructure, will the U.S. be able to make meaningful reductions in gas-based electricity.
The continued rise in natural gas use within the U.S. energy system underscores the challenge of balancing increased power demand with the need to transition away from fossil fuels. The road to substantial cuts in gas-fired power will require significant advances in renewable energy capacity and storage technology, which are still far from being realised on a large enough scale.
Diversified Energy Company plc (LON:DEC) is an independent energy company engaged in the production, marketing, transportation and retirement of primarily natural gas and natural gas liquids related to its U.S. onshore upstream and midstream assets.
