EIA sees continued decline of coal, rising use of gas and renewables

Source: Manuel Quinones, E&E reporter • Posted: Thursday, December 6, 2012

Power plants’ use of coal for electricity production will continue to decline over the next 15 years, the Energy Department’s statistical arm said today.

The Energy Information Administration’s draft “Annual Energy Outlook 2013″ says more efficient use of fuel by existing power plants and the building of few new coal plants will reduce coal use.

“Coal remains the largest energy source for electricity generation throughout the projection period, but its share of total generation declines from 42 percent in 2011 to 35 percent in 2040,” the report says.

Coal’s predicted share of power generation is lower in the latest EIA report compared to last year’s estimate because of tighter regulation and competition from other energy sources. The share of generation from renewables may reach 16 percent in 2040.

“Relatively low natural gas prices, facilitated by growing shale gas production, spur increased use in the industrial and electric power sectors, particularly over the next 15 years,” said EIA.

“Although natural gas also continues to capture a growing share of total electricity generation,” the report says, “natural gas consumption by power plants does not increase as sharply as generation because new plants are very efficient.”

Appalachia is getting hit hard by shifts in the energy mix. While other regions will see increased coal production, EIA said, Appalachia’s share will fall to 32 percent from 38 percent.

At least two companies want to turn coal into liquid fuel, one in West Virginia and the other in Wyoming. But EIA said it doesn’t expect production until 2023.

In the short term, EIA this week said, coal production will decline 7 percent this year compared to 2011. While exports may reach a record 125 million short tons this year, they are expected to decline in 2013 but remain above 100 million short tons.

EIA said, “The primary reasons for the expected decline in coal exports include continuing economic weakness in Europe, lower international coal prices and increasing production in Asia.”