U.S. demand for natural gas as a electric power generation fuel is expected to double by the year 2015, an industry analyst said March 14, but gas prices will not rise as a result.

Paul Holtberg, group manager of the baseline/gas resource center at the Gas Research Institute (GRI), told attendees at a natural gas conference in Calgary, Alberta, that gas prices might increase slightly through the year 2000 as various regulatory issues are dealt with, but should be "relatively flat" through 2015.

This seemingly remarkable forecast tracks reasonably well with the U.S. Department of Energy's (DOE) ANNUAL ENERGY OUTLOOK 1996 (see WIND ENERGY WEEKLY #681, January 22, 1996), which sees an even sharper increase in natural gas's share of electric generation, from 14% today to 27% by 2015. The DOE projection, however, is evidently disconnected from Administration climate change programs--it predicts a substantial increase in U.S. emissions of carbon dioxide (CO2), the leading greenhouse gas.

According to the OUTLOOK, "Between 1994 and 2015, [37,000 MW] of nuclear capacity are expected to be retired, resulting in a decline of 207 billion kWh per year, or 32%, from current nuclear generation. To compensate for the loss of baseload capacity and to meet rising demand, [230,000 MW] of new fossil- fueled capacity will be needed. The resulting increase in generation from fossil fuels will increase carbon emissions by 160 million tons, or 32%, over current levels." Carbon dioxide emissions from natural gas are seen as approximately doubling (in line with its share of generation) over the period, even as coal- fired generation and CO2 emissions also rise.

It will be interesting to see how this is ultimately reconciled with Administration pledges to reduce CO2 emissions to 1990 levels by the year 2000. The OUTLOOK's forecast, which is basically by definition a "business-as-usual" projection, notes that "Although renewable capacity increases from [94,000 MW] in 1994 to [115,000 MW] in 2015--reducing the impact of nuclear retirements on total carbon emissions--the intermittent nature of renewable technologies prevents them from compensating completely for the losses in nuclear capacity."

The Administration is currently working on an update of its Climate Change Action Plan (CCAP), which is aimed at carrying out the pledge to stabilize greenhouse emissions. A DOE spokesman said March 27 in an interview that the OUTLOOK numbers, with some minor modifications from other forecasts, are used as a starting point for CCAP. He also said that the CCAP update will, for the first time, project emissions effects out to the year 2010, which should shed some light on the Administration's view of the longer term. The update is likely to be released sometime in April, sources said.

Since gas is also viewed as the fuel of choice in much of the developing world, there is also some question as to whether rosy forecasts about low future prices will hold up. DOE's INTERNATIONAL ENERGY OUTLOOK 1995 sees global energy demand increasing by 36% between 1990 and 2010, but natural gas consumption jumping by 47% over the same period, and by 140% in the rapidly growing economies of southeast Asia. If global oil production peaks around 2000 or shortly thereafter, as a number of observers now predict, rising energy prices may make a hash of today's optimism.

Peter Fusaro of Global Change Associates, another speaker at the Alberta conference, agreed that gas-fired capacity should dominate the market for new power in the U.S. following utility deregulation, which is expected to put a heavy premium on low prices. However, Fusaro noted, that will require the development of long-term supply contracts that will reduce the financing risk of new plants and pipelines.


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