HG Markets

Natural Gas Futures Plunging As Recession Fear Favoring Bears

Crude Oil

Harvest Global Markets :

The denial of export permit extensions by the U.S. Department of Energy to liquefied natural gas (LNG) developers who fail to meet construction deadlines presents a new challenge for greenfield plants, according to analysts. The DOE’s recent announcement stated that future extensions would only be granted under exceptional circumstances, refusing an extension for Energy Transfer’s proposed Lake Charles LNG project. Analysts noted that this change will have a significant impact on companies lacking a track record and available financing. Approximately a dozen LNG projects in the U.S. and Mexico, with a combined export capacity of over 20 billion cubic feet per day, are now encountering obstacles due to this alteration. Non-Free Trade Agreement permits are crucial for new participants to secure financing, and without extensions, their prospects may diminish considerably, leading to project cancellations.

The U.S. Energy Information Administration (EIA) stated that the capacity of coal-fired power plants in the country will decline by over 50% from 2022 levels by 2050. Environmental regulations increasing costs, coupled with the rise of new natural gas and renewable energy plants, will phase out the aging coal fleet. This projection is part of the Biden administration’s comprehensive plan to reduce greenhouse gas emissions and combat climate change. The EIA’s Annual Energy Outlook 2023 provides three scenarios with varying costs of zero-carbon technology, estimating a decline in coal-fired electric-generating capacity ranging from 52% to 88%, reaching between 23 GW and 97 GW by mid-century.

The Environmental Protection Agency expects this plan to reduce emissions from coal and new gas plants by 617 million tons from 2028 to 2042, equivalent to the annual emissions reduction of 137 million passenger vehicles. Furthermore, the EIA projects a significant increase in solar and wind capacity, more than tripling by 2050 and accounting for 40% to 69% of U.S. electricity generation. Although coal will still contribute between 1% and 8% of electricity in 2050, its ability to operate continuously without relying on sunlight or wind availability remains a factor.

Share this post

× How can I help you?