2013 Prediction: Energy Levels The Field

Time will tell if natural gas is a bridge or a brick wall.

Natural Gas Power

Science and technology have utterly transformed human life in the past few generations, and forecasts of the future used to be measured in decades. But big changes arrive faster and faster these days. So here we've shifted our forecast to the near-term, because we're right on the verge of some extraordinary stuff. These are the trends and events to watch out for in 2013. See them all here.

Natural gas has emerged as a cheap, abundant fuel source because of hydraulic fracturing, and energy companies are now racing to develop it. Gas isn't perfect. Its environmental reputation is controversial at best; emissions from methane that escapes during drilling give it a big carbon footprint. But natural gas releases 50 percent less carbon dioxide than coal at the smokestack, so proponents have championed its use as a bridge to still-cleaner sources of power.

Recent trends seem to support that idea. Coal use is plummeting—it now generates just 42 percent of U.S. electricity—and carbon emissions from energy production have dropped to the lowest level in 20 years (the recession deserves credit for that too). Meanwhile, wind generation jumped 10 percent in 2012, and solar more than doubled.

But for gas to really be a bridge fuel, it has to lead to, not block, the destination at the other end. According to a new analysis by the Congressional Research Service, the glut of natural gas and its rock-bottom prices are actually keeping renewables from taking off—even though their costs have never been more competitive.

That could begin to change in 2013. As public concern over the environmental and health impacts of fracking mounts, multiple agencies may levy new regulations on drilling. If that occurs, gas prices would likely rise, increasing the appeal of renewables.

Wind and solar could see boosts of their own. Although the production tax credit for wind energy­—an important subsidy due to expire in 2012—faces opposition from Congress, the governors of 28 states with strong wind development called for its extension. Also watch for the Department of the Interior to make good on promises to allow solar energy plants on giant swaths of federal lands in Colorado and elsewhere, and for commercial utility-scale solar projects in the Southwest to near completion.

If all that happens, renewable energy will reach a scale on which it can truly compete. Only then will we know if natural gas was a step in the transition, or if it turned out to be a bridge to nowhere.