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ICF energy outlook

Hydrocarbon Engineering,

ICF International has released its ICForecast Energy Outlook for the first quarter of this year. The study points out the near, mid and long term future impacts of proposed US federal environment regulations, including up to date analysis of US EPA rules and regulation activities.


Ahead of the EPA’s Mercury and Air Toxics Standards (MATS) rule, ICF is projecting 62 GW of coal generating unit retirements, including already announced plans. With the US Supreme Court set to hear arguments related to the rule in early 2015, it is not yet clear, according to ICF, whether the implementation date will change. However, EPA’s restart of the Cross State Air Pollution Rule and the movement toward a final Clean Power Plan will continue to put pressure on those coal units, especially with natural gas prices anticipated to remain low in the near term.

Natural gas

ICF has said that the natural gas market is entering 2015 with bearish price signals. The mild weather in December last year and production growth that continues to outpace demand have kept prices low. Production from the Marcellus and Utica shale plays, concentrated in Pennsylvania and Ohio, now account for nearly one quarter of all US gas production. ICF projects, that when assuming normal temperatures for the remainder of the winter, a slight seasonal rise in gas prices, followed by lower prices will occur.

Over the long term, the report says that sustained lower oil prices could have impacts on both gas production and market growth. Weaker oil prices are also expected to slow growth in US shale oil plays, which also produce large volumes of natural gas. However, many of the new demands for natural gas, such as LNG exports, are driven by the large price spread between gas and oil prices. Therefore, sustained low oil prices could reduce growth in demand driven by oil/gas price arbitrage. Lower oil prices are unlikely to have any effect on power sector gas demand, which remains the primary force behind long term demand growth.


ICF has reported that a small extension of the renewable electricity production tax credit was included in the December 2014 tax extenders package; however, it fell short of the two year extension what wind advocates were hoping to secure. As a result, the wind industry will still face some uncertainty ahead, although renewable portfolio standards will continue to drive development opportunities in regions where wind energy is otherwise uneconomic. On the other hand, distributed solar continues to receive incremental support from ongoing evolution of that landscape.


Chris MacCracken, Principal, ICF International said, “the regulatory sands continue to shift under generation owners as the planned compliance data for MATS draws closer, leaving little time to modify compliance and investment decision. Despite the continued regulatory uncertainty adding decision risk, regulation and market forces will drive new investment in gas infrastructure, coal export facilities and generation facilities over the next five years.”

Edited from press release by Claira Lloyd

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