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Reuters, Published December 16 2013

Forecast: Natural gas to dethrone coal as U.S. top electricity source by 2040

WASHINGTON - Natural gas will overtake coal to become the largest source of U.S. electric generation by 2040, when it is expected to account for 35 percent of domestic electricity, according to a new forecast by the Energy Information Administration.

Coal-fired generation has dominated U.S. electricity supply for decades, accounting for 37 percent of the domestic share in 2012, but its share will continue to fall because of high plant construction costs as well as low natural gas prices and looming curbs on carbon dioxide emissions, the agency said in its 2014 Annual Energy Outlook.

The EIA based the forecast on a scenario where current laws and regulations remain unchanged through 2040. It did not factor in major regulations targeting carbon dioxide emissions from power plants that are due to be proposed in 2014.

In 2035, the EIA predicts natural gas and coal will each represent 34 percent of total generation, but by 2040, coal's share will drop to 32 percent, and natural gas' will increase to 35 percent.

"Additional retirements of coal and nuclear plants result in the need for new capacity, and new natural gas-fired plants are much cheaper to build than coal, nuclear, or renewable plants," the EIA said.

Renewable energy use, excluding hydropower, will account for 28 percent of the overall growth in electricity generation from 2012 to 2040, encouraged by U.S. tax credits, state-level policies and federal requirements to use more biomass-based power.

In the later years of the forecast, renewable energy will become more cost-competitive with fossil-based energy sources.

As power plants continue to abandon coal for natural gas and, to some extent, renewable sources, the EIA expects total U.S. energy-related carbon dioxide emissions to remain below their 2005 level of 6 billion tonnes through 2040, when it forecasts them at 5.6 billion tonnes.

The EIA projects that energy-related CO2 emissions will be about 9 percent below the 2005 level in 2020 and 7 percent below in 2040. Under current policies and regulations, the United States would be just more than halfway to the Obama administration's global emissions pledge for 2020.

President Barack Obama set a goal in his first term to cut U.S. greenhouse gas emissions 17 percent below 2005 levels by 2020. In June, he outlined a series of measures aimed at getting the country to that goal and that do not require congressional approval.