The laws of thermodynamics dictate that conversion efficiency will never be 100 percent, because heat is lost at every step of the conversion process. But new technologies may be able to greatly increase conversion efficiency, moving from an overall rate of 36 percent to closer to 50 percent.
At present, coal — in all its carbon-belching inefficiency — is king because it's cheap. Still, the use of natural gas to create electricity has been rising rapidly, in part because of more-efficient gas turbines.
Natural gas prices have been climbing, however, and coal prices could rise as well.
"High fossil fuel prices will drive technology and innovation, because they respond to price signals," said Frank A. Wolak, an economist at Stanford. "Technology can improve efficiency by working the margin, gaining 10 to 15 percent. That's money."
Adding a carbon tax or regulating carbon trading could also change price incentives, increasing demand for nuclear and renewable energy sources.
"Once the cost of burning fossil fuels doubles, the renewable energy options begin to look really good," said Jon G. McGowan, a mechanical engineer at the University of Massachusetts.