Ingaa: Coal problems mean opportunities for natural gas

As U.S. environmental controls are toughened, utilities' coal-burning plants will be susceptible to cost pressures and competition from alternative power sources-notably natural gas-predicts Washington International Energy Group in a new study. The study, prepared for the Ingaa Foundation, said even in the face of competition and pressure for lower prices, coal is expected to remain the largest single source of electric power generation in the U.S. through at least 2007.

Nov. 17, 1997

2 min read

The study, prepared for the Ingaa Foundation, said even in the face of competition and pressure for lower prices, coal is expected to remain the largest single source of electric power generation in the U.S. through at least 2007.

The paper analyzed the future vulnerability of coal-fired capacity and the potential for gas replacement. It evaluated three alternative approaches to controlling utility nitrogen oxide emissions and two carbon dioxide control scenarios.

Scenarios

The paper said stricter nitrogen oxide emissions controls could result in 3-9% of existing coal-fired capacity becoming vulnerable to shutdown by 2007, creating market opportunities for gas in electric power generation totaling 26-88 bcf. In contrast to the relatively modest effect on coal demand from stricter nitrogen oxide controls, the study said, policies to control carbon dioxide emissions will have a dramatic effect on coal-plant operating costs.

A scenario with a market value equivalent of $9/ton of carbon emissions would place 21% of existing coal capacity at risk, while a more costly carbon dioxide control scenario with a $20/ton market value could make as much as 61% of existing coal capacity vulnerable.

The study said the "more plausible" $9/ton scenario could create a market potential for gas of up to 2.2 tcf by 2007.

Jerry Halvorsen, president of the Ingaa Foundation and of the Interstate Natural Gas Association of America, said "This study emphasizes the vital role that natural gas can play in the development of U.S. and world environmental policies."

Last month, Halvorsen wrote President Clinton recommending principles to support Ingaa's position that any international agreement adopted by the U.S. for global climate change should recognize the environmental advantages of natural gas.