DOE: Gas to outpace coal by 2040

CHARLESTON, W.VA. -- Natural gas will overtake coal to provide the largest share of U.S. electrical power generation by 2040, according to the latest projections from the federal Department of Energy.Natural gas will produce about 35 percent of total U.S. generation, compared to 32 percent for coal, in 2040, according to the department's Energy Information Administration estimates."Projected low prices for natural gas make it a very attractive fuel for new generating capacity," the agency said in a preview of its 2014 Annual Energy Outlook. "In some areas, natural gas-fired generation replaces generation formerly supplied by coal and nuclear."Just last year, the EIA had projected coal to maintain its dominance over natural gas, with 35 percent of generation in 2040, compared to 30 percent for natural gas.Renewable power is forecast to increase its share of generation from 12 percent in 2012 to about 16 percent in 2040, according to the new EIA figures, released on Dec. 16."Generation from renewable resources grows in response to federal tax credits, state-level policies, and federal requirements to use more biomass-based transportation fuels, some of which can produce electricity as a byproduct of their production processes," the EIA said. "In their final decade of projection, however, renewable generation growth is driven by increasing cost competitiveness with other nonrenewable technologies."Coal has long been the nation's leading source of electricity, and industry boosters for many years bragged about it producing more than half of all U.S. electricity. But coal has been under major pressure, with competition from inexpensive natural gas, growing concerns about global warming and tougher federal air pollution regulations on power plants."Coal-fired generation is getting increasingly expensive compared with cleaner power sources," said Jeff Deyette, assistant director of energy research at UCS and co-author of the study, which was initially released last year and updated this month. "This shift in economics is a historic opportunity to modernize our electric sector and gain the economic, health and climate benefits that come with it."Earlier this month, Union of Concerned Scientists researchers reported that more 300 more coal-fired power plants -- in addition to the 87 gigawatts of generation capacity already retired or slated for retirement -- are no longer economically competitive and should be considered for closure. These "ripe for retirement" plants produce electricity that is more expensive than electricity from an average existing natural gas plant, once the costs of modern pollution controls are included, the researchers said in a paper published in the peer-reviewed journal Electricity.
Over the last few years, Central Appalachian coal has been particularly hard hit, in part because of competition from Wyoming and Illinois, but also because the easy-to-get reserves in the region are running out.The new EIA report forecasts an "accelerated decline" in Central Appalachian coal production, with annual output dropping from 148 million tons in 2012 to 80 million tons in 2040. Northern Appalachian production, meanwhile, is forecast to increase from 126 million tons to 151 million tons over the same period."The combination of slow growth in electricity demand, competitively priced natural gas, programs encouraging renewable fuel use, and the implementation of environmental rules dampens future coal use," the EIA said.EIA analysts forecast that coal-fired generation will flatten out after 2020, as older and less efficient power plants are retired and fewer new coal plants are built.The EIA said that market concerns about greenhouse gas emission "continue to dampen the expansion of coal-fired capacity," but that its forecast is based on current laws and policies, which do not require curbs on global warming pollution.Meanwhile, natural gas production has been booming, as driller tap into huge shale-gas resources like the Marcellus in West Virginia. They're using advanced technologies, including hydraulic fracturing and horizontal drilling, to reach gas reservoirs that they previously couldn't.
The new EIA report said that, "Ongoing improvements in advanced technologies for crude oil and natural gas production continue to lift domestic supply and reshape the U.S. energy economy."The EIA projected that natural gas production would continue to grow steadily, with a 56 percent increase between 2012 and 2040, when output reaches 37.6 trillion cubic feet.The forecast for cumulative production of "dry" natural gas is about 11 percent higher than last year's EIA projections, primarily reflecting continued growth in shale-gas production. Another contributing factor, the EIA said, is ongoing drilling in shale and other plays with high concentrations of natural gas liquids -- such as ethane, propane and butane -- which in energy-equivalent terms have a higher value than dry natural gas.Reach Ken Ward Jr. at or 304-348-1702.
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