Natural gas and noncarbon fuels will dominate any increase in demand for generating fuels over the next 20 years, according to Mary Novak, managing director of IHS Global Insight managing director, North American energy services.

There will be a slight decline in residential demand for natural gas, commercial demand will stay flat and the growth in industrial demand will remain below 1% per year, Novak said during an energy conference jointly sponsored by the Energy Information Administration (EIA) and Johns Hopkins University School of Advanced International Studies in Washington, DC, Tuesday.

“Any and all growth then has to come from whatever market it can steal from coal and the electric sector,” she said.

Growth in electricity demand is slowing and will continue to slow in coming years, she said.

“Over the period 2010-2030 we actually have electricity demand only growing 1.2% per year,” down from the 1.6-1.8% forecast a decade ago, according to Novak, who said the lower demand growth forecast is due to policies adopted between 2000 and 2009.

“What it means is that we don’t have any net additions required in our forecast. We tell our industrial clients not to worry, that there’s a lot of capacity out there that really needs to be switched out — older coal capacity actually needs to be replaced with newer coal capacity, and we need to put on a lot of scrubbers.”

Nonfossil fuel energy use will grow rapidly over the next two decades, but fossil fuels will still provide about 78% of total energy use in 2030, according to John Conti, director of EIA’s Office of Integrated Analysis and Forecasting.

And while coal could be the lowest-cost fuel to generate electricity in the United States by 2025 — followed by natural gas, nuclear and wind generation — adding a projected $60/ton cost for carbon dioxide emissions to the equation would make coal the most expensive of the four, according to Tom Eizember, ExxonMobil Corp. planning division manager, Corporate Strategic Planning.

“So that’s driving in the U.S. a shift away from coal toward gas…that is fundamentally driving our fuel selection in the developed world,” Eizember said.

In its April Short-Term Energy and Summer Fuels Outlook EIA said it expects Henry Hub natural gas spot prices to average $4.44/MMBtu in 2010, up 49 cents from 2009’s average price, and forecast 2011 Henry Hub spot prices to average $5.33/MMBtu (see Daily GPI, April 7). Going into 2011, EIA is forecasting gas consumption declines across the board — except for the industrial sector. Barclays Capital analysts have said supply growth this year could result in lower average prices in 2011 (see Daily GPI, April 1).

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