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EIA: Gas fired electricity to exceed coal by 2022

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Hydrocarbon Engineering,

EIA's Annual Energy Outlook 2016 (AEO2016) Reference case projects that natural gas fired electricity generation will exceed coal-fired electricity generation by 2022. Generation from renewables are expected to overtake coal fired generation by 2029. The shift away from coal fired generation to a combination of higher natural gas fired and renewables generation and greater energy efficiency is expected to be accelerated by the US Environmental Protection Agency's Clean Power Plan (CPP).

Source: US Energy Information Administration, Annual Energy Outlook 2016

The share of natural gas-fired generation exceeded coal-fired generation in 2016, according to EIA's latest Short-Term Energy Outlook.

Growth in renewables generation is projected throughout the country, following Congress's recent extension of favourable tax treatment for renewable energy sources.

EIA's analysis of the US electricity market is divided into 22 regions, which in this discussion are further reduced to 9 regions. The current generation mix across these regions varies considerably, with significant differences in the use of fossil-fuel, nuclear, and renewable energy sources.

Source: US Energy Information Administration, Annual Energy Outlook 2016

The Midwest/Mid-Atlantic, Southwest/Rockies, and Northern Plains tend to have greater reliance on coal-fired electricity generation. These regions have among the highest CO2 reduction requirements and are anticipated to have the largest shifts in their generation mix. In the Midwest/Mid-Atlantic region, a large decline in coal generation is offset by an increase in natural gas generation and relatively modest growth in renewable generation. These projected changes are expected to result in a 26% decline in the Midwest/Mid-Atlantic region's emission rate—from 1826 to 1357 lbs of CO2 per megawatthour, the largest drop of any region in both percentage and absolute terms.

Source: US Energy Information Administration, Annual Energy Outlook 2016

The Southwest/Rockies region is expected to see an expansion of renewables generation that is nearly twice as large as the decline in coal generation.

The Northeast region and California have among the lowest emission reduction requirements, and as a result are expected to register small or no change in generation mix as a result of the CPP.

The Reference case assumes that all states implement the Clean Power Plan using a mass-based standard that caps emissions from both existing and new plants, with allowance revenues rebated to rate payers. As the plan allows flexibility in implementation approaches, EIA produced several alternative cases that consider how outcomes change with different implementation approaches, and in a scenario with tighter standards beyond 2030.

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