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A recent report from a natural gas pipeline industry trade group estimates that half of the oldest, dirtiest coal-fired power plants in the United States could be at risk of retirement in the near term, creating a potential demand for an additional 2 trillion cubic feet of natural gas a year (an average 5.5 billion cubic feet per day).

That would be a 9 percent boost in total U.S. demand from 2009 consumption.

But whether the owners of those coal-fired power plants retire their generating facilities depends, in great part, on pending federal laws restricting carbon emissions and imposing costs on those emissions. The higher the cost of compliance, the more likely older coal-fired plants will be retired, with the potential for an increased reliance on gas-fired power generation.

The Interstate Natural Gas Association of America (INGAA) contracted with consultant ICF International to provide an estimate of the nation's coal-fired generating plants that either lack emission "scrubbers," are not scheduled to receive scrubbers, or are too old and inefficient to justify the high capital cost of further emission controls.

The May 11 INGAA summary - "Coal-Fired Electric Generation Unit Retirement Analysis" - estimates that 50 gigawatts of coal-fired power generating capacity across the United States is at risk of retirement in the near term, with two-thirds of that capacity in Wisconsin, Illinois, Michigan, Indiana, Ohio, Kentucky, Tennessee, Mississippi and Alabama.

"A portion of this demand could be met by increasing generation at existing natural gas-fueled electric generation plants," INGAA's executive summary of the report stated. "While natural gas generally is more expensive than coal," the summary said, gas emits fewer pollutants and "does not face the same pressures from impending environmental regulations."

Burning gas instead of running the older coal plants to generate 50 gigawatts of power a year could reduce carbon dioxide emissions by 170 million tons a year nationwide, the summary said. That would equal about 3 percent of CO2 emissions in the United States in 2006.

"A number of impending environmental regulations have created uncertainties about the ability of certain coal-fired power plants ... to remain profitable into the extended future," the summary said, citing pending greenhouse gas regulations as "one of the largest threats to coal-fired power plants' economic viability."

Of the approximately 310 gigawatts of coal-fired generating capacity in the country, almost half are running with pollution scrubbers and an additional 50 gigawatts have scrubbers under construction or permitted. The INGAA-funded analysis estimates that half of the remaining plants may be too old and inefficient to justify the expense of new pollution controls - making them prime candidates for retirement.

The INGAA estimate for potential growth in gas demand is within the range of a recent Congressional Research Service report - "Displacing Coal with Generation from Existing Natural Gas-Fired Power Plants" - which pegged the hypothetical growth at 1.2 tcf to 4.8 tcf a year (based on 2007 data).

Those numbers represent the range between 25 percent displacement and maximum displacement of coal by increased capacity utilization at existing gas-fired power plants.

The January 2010 congressional report includes, however, a cautionary note: "Natural gas markets have historically been exceptionally difficult to forecast. According to an EIA (U.S. Energy Information Administration) self-assessment of its long-term projections, 'the fuel with the largest difference between the projections and actual data has generally been natural gas.'"

While coal-fired power plants face the high cost of cleaning up their emissions, the natural gas industry has its own dollar-sign demon - price volatility of the fuel. Whereas coal prices are relatively stable, gas-fired power is at the mercy of a much more volatile fuel commodity price.

Certainty of long-term gas supplies, accompanied by more stability in contract pricing, could reduce the volatility risk for electric utilities and other large customers, driving up demand for gas.

Another issue confronting the nation that could help boost demand for gas would be a change in utility regulation, said a report, "The Role of Natural Gas in a Low-Carbon Energy Economy," issued last month by the Worldwatch Institute.

Instead of requiring electrical utilities to order up power based on the lowest cost of generation (usually a coal-fired plant), a shift in power dispatch requirements to consider lower emission levels (usually a gas-fired plant) would boost demand for gas while reducing CO2 emissions, the report said.

But even if utilities want to switch from coal to gas, they might have trouble moving the power. "If the existing transmission network does not have sufficient capacity in the right places, then it may not be practical to move gas-powered electricity to loads currently served by coal plants without investing in upgraded or new power lines," said the January Congressional Research Service report on displacing coal with gas-fired power plants.

"Transmission congestion can increase costs to consumers by forcing utilities to depend on nearby inefficient power plants to meet load instead of importing power from more distant but less costly units.

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