US renewables could eat into natural gas demand
US natural gas demand could suffer if the Biden administration makes good on its renewable energy ambitions, Norwegian consultancy Rystad Energy said in a March 16 research note.
From the campaign trail in 2020, presidential candidate Joe Biden outlined an ambitious climate plan that envisions expansions to the renewable energy footprint. Since taking office as the 46th US president, Biden has scrapped permits for the long-awaited Keystone XL oil pipeline, the first in a series of executive orders aimed at rolling back much of his predecessor’s fossil fuel ambitions, and met with his top Cabinet officials to review the clean energy future and the requirements needed for the US to contribute.
In its note, Rystad noted that to realize a goal of net-zero emissions by 2050, the US would need to install 1,000 GW of solar capacity on nearly 35,000 km2 of land – about 0.43% of the landmass in the Lower 48. Another 600 GW of wind capacity would also be needed. As of February, Rystad estimated that total operational solar power capacity in the US at around 48.8 GW, covering an estimated 1,700 km2 of land.
“Although building all these solar farms is no easy task, with the right choice of unoccupied land and with sufficient investments in infrastructure, it can be done,” Felix Tan, a senior analyst at Rystad Energy, said.
The consultancy said the anticipated increase in renewable energy usage puts about 56bn f3/day worth of natural gas demand at risk. In its latest monthly report, the US Energy Information Administration (EIA) said it expected US natural gas consumption to total 81.6bn f3 in 2022, meaning more than half of total US gas demand could be replaced by renewable energy resources at some point.
Renewable energy installations in the US are on an incremental rise. The EIA expects total electricity generated from renewable resources will increase from 20% last year to 23% in 2022.
Fossil fuels still dominate the US electricity landscape. Natural gas used for power generation should account for about 36% of the total capacity this year, but edge lower to 35% in 2022, the EIA says. Coal for electricity generation remains static at about 20% for the foreseeable future.