Gas use by US utilities seen rising on air quality standards:
analysts
Washington (Platts)--9Aug2013/416 pm EDT/2016 GMT
A "materially larger increase" in natural gas use by US utilities
could occur between 2015 and 2020 if the US Environmental Protection
Agency adopts tougher new air quality standards governing CO2 emissions
for fossil fuel plants, Bernstein Research said in a report Friday.
"In a scenario where the EPA sets a CO2 reduction target of 5% from 2012
levels by 2020 through a cap and trade scheme, we would expect gas
consumption to increase by 4 Bcf/d," the analysts said. "A CO2 reduction
target of 10% by 2020 could double this figure, causing utility gas burn
to increase by 8.1 Bcf/d."
The analysts said they expect state-mandated increases in the use of
renewable generation to continue through 2020, suppressing utility
demand for coal and gas.
"The state renewable portfolio standards that are currently in effect
require that US renewable generation expand by about 70 million MWh
through 2015 and about 200 million MWh through 2020," the analysts said.
"We expect renewable generation to increase by about 90 million MWh from
2011 through 2015 and by about 225 million MWh through 2020," they
added. "We calculate that this growth in renewable energy will reduce
utilities' use of gas in power generation by about 1.2 Bcf/d through
2015, and by a further 1.9 Bcf/d between 2015 and 2020."
But the analysts said they expect retirements of coal fired power plants
"to surge" through 2015, when the EPA's Mercury and Air Toxics Standards
come into effect.
"This loss of coal fired generation will require a significant increase
in the output of the nation's gas fired generating fleet, and a
commensurate rise in utility gas burn," the analysts said.
"Through 2015, we see coal plant retirements driving an increase in
utility gas burn of 3.1 Bcf/day, followed by a further increase of 1.7
Bcf/d from 2015 through 2020," they added.
--Rodney White,
rodney_white@platts.com
--Edited by Kevin Saville,
kevin.saville@platts.com
© 2013 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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