Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Coal Alternative CasesHigh Economic Growth, High Oil andGas Prices Increase Coal DemandFigure 105. Projected variation from the referencecase projection of U.S. total coal demand in fourcases, 2030 (million short tons)4002000High economicgrowth caseOther demandCoal-to-liquidsElectric powerHigh price caseHigher Mining and TransportationCosts Reduce Demand for CoalFigure 106. Average delivered coal prices in threecost cases, 1990-2030 (2004 dollars per short ton)50403020HistoryProjectionsHigh costReferenceLow cost-20010-400Low economicgrowth caseLow price case01990 1995 2004 2010 2015 2020 2025 2030In comparison with the reference case, electricitydemand is higher in the high economic growth caseand lower in the low growth case. Accordingly, coalconsumption also rises and falls in the high and lowgrowth cases, respectively (Figure 105). As in the referenceand high growth cases, the first CTL plantcomes on line in 2011 in the low economic growthcase; but total CTL capacity in 2030 in the low growthcase is only 62 percent of that in the high growth case.In the high price case, higher natural gas prices discouragenatural-gas-fired generation and boost coalfiredgeneration. Delivered natural gas prices to theelectric power sector in 2030 are $1.63 per million Btuhigher in the high price case than in the referencecase, whereas coal prices are only 10 cents per millionBtu higher than in the reference case. In the referencecase, coal fuels 57 percent of total electricity generationin 2030 in the reference case, as comparedwith 64 percent in the high price case and 46 percentin the low price case.Higher world oil prices in the high price case favorincreased investment in CTL, and the demand forcoal at CTL facilities increases to 20 percent of totalcoal consumption in 2030. In the low price case, noCTL plants are operating in 2030. Because electricitygeneration at CTL plants displaces some generationin the electric power sector in the high price case, coaldemand in the electric power sector is only 75 milliontons higher than in the reference case. In the lowprice case there is more natural-gas-fired electricitygeneration, and as a result coal demand in the electricpower sector is 151 million tons lower than in the referencecase.Alternative assumptions about future coal miningand transportation costs affect coal prices and, consequently,demand. The two alternative coal cost casesdeveloped for AEO2006 examine the impacts on U.S.coal markets of alternative assumptions about miningproductivity, labor costs and mine equipmentcosts on the production side, and railroad productivityand rail equipment costs on the transportationside. Adjustments of about 2.5 percent from the referencecase assumptions are based on variations in historicalgrowth rates for the coal mining and railtransportation industries since 1980.In the high cost case, the average delivered coal pricein 2030, in constant 2004 dollars, is $45.39 per ton—50 percent higher than in the reference case (Figure106). As a result, U.S. coal consumption is 284 milliontons (16 percent) lower than in the reference case in2030, reflecting both a switch from coal to naturalgas, nuclear, and renewables in the electricity sectorand reduced production of coal-based synthetic liquids.In the electric power sector, 111 gigawatts ofnew coal-fired generating capacity is built by 2030 inthe high cost case—63 gigawatts less than in the referencecase. CTL production in 2030 in the high costcase totals only 0.2 million barrels per day, or 77 percentless than in the reference case.In the low cost case, the average delivered coal pricein 2030 is $21.42 per ton—29 percent lower than inthe reference case—and total coal consumption is 160million tons (9 percent) higher than in the referencecase.102 Energy Information Administration / Annual Energy Outlook 2006