AEO 2014: Gas to Overtake Coal

Natural gas will overtake coal to provide the largest share of US electric power generation, according to the US Energy Information Administration‘s Annual Energy Outlook 2014 Early Release.

Projected low prices for natural gas make it a very attractive fuel for new generating capacity, according to the EIA’s AEO 2014 Reference case. In some areas, natural-gas-fired generation will replace power formerly supplied by coal and nuclear plants, the report predicts. As such, in 2040, natural gas will account for 35 percent of total electricity generation, while coal will accounts for 32 percent, the report predicts.

Higher natural gas production will also support increased exports of both pipeline and liquefied natural gas. In addition to increases in domestic consumption in the industrial and electric power sectors, US exports of natural gas also increase in the AEO 2014 Reference case. US exports of LNG will increase to 3.5 Tcf before 2030 and remain at that level through 2040, the report predicts.

Pipeline exports of US natural gas to Mexico will grow by 6 percent per year, from 0.6 Tcf in 2012 to 3.1 Tcf in 2040, and pipeline exports to Canada grow by 1.2 percent per year, from 1.0 Tcf in 2012 to 1.4 Tcf in 2040. Over the same period, US pipeline imports from Canada will fall by 30 percent, from 3.0 Tcf in 2012 to 2.1 Tcf in 2040, as more US demand is met by domestic production, the report predicts.

Generation from renewable fuels, unlike coal and nuclear power, is higher in the AEO 2014 than in AEO 2013. Electric power generation from renewables is bolstered by legislation enacted at the beginning of 2013 extending tax credits for generation from wind and other renewable technologies.

AEO 2013 predicted that over the next three decades, world energy consumption will increase by 56 percent, driven by growth in the developing world. The report cited rising prosperity in China and India as a major factor in the outlook for global energy demand.