Coal Gaining Ground On Gas In Energy Market

Coal Gaining Ground On Gas In Energy Market

Natural gas faces growing competition from coal and renewable energy sources at a time when its potential demand growth is slowing down, an International Energy Agency official said. “The last large contracts for [LNG] were signed in 2014 just before oil prices collapsed. We believe it is still competitive, but there are risks,” said Laszlo Varro, who heads IEA’s gas, coal and power markets division.

“LNG is the only option besides pipelines to transport large amounts of gas from country to country, but it’s very expensive,” Varro said during a June 25 presentation at the Center for Strategic and International Studies.

“The coal industry in the United States is dreaming of the day when gas prices go $5/MMbtu higher, because it costs more than that to transport US LNG to Europe and Asia.”

Varro spoke 3 weeks after IEA said in its 2015 Medium-Term Gas Market Report that global demand would rise 2%/year through 2020, down from the 2.3%/year it projected in its year-earlier forecast. It said weaker gas demand in Asia, where persistently high gas prices caused users to switch to other options until very recently, was behind the downward revision.