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Today in Energy

April 4, 2022

EIA explores effects of not building future interstate natural gas pipelines

natural gas prices, production, and consumption in two AEO2022 cases
Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 (AEO2022)

In our Annual Energy Outlook 2022 (AEO2022), Issues in Focus: Exploration of the No Interstate Natural Gas Pipeline Builds, we analyze the effects on the energy market if no additional U.S. natural gas pipeline capacity is built between 2024 and 2050. In the No Interstate Natural Gas Pipeline Builds case, we project 5% less natural gas production and 4% less natural gas consumption in 2050 compared with the Reference case. We also project that the Henry Hub spot price in 2050 would be 11% higher in that case than in the Reference case.

Restricting U.S. interstate pipeline builds in our projection results in 7.4 billion cubic feet per day (Bcf/d) less interregional capacity in 2050 than in the Reference case projection, which, for example, limits the amount of natural gas that can flow from the Appalachia production region to demand areas such as the Midwest.

The higher natural gas prices that result from capacity constraints primarily affect natural gas consumption in the U.S. electric power sector, which is more price-sensitive than the residential, commercial, and industrial sectors. In the No Interstate Natural Gas Pipeline Builds case, we project 11% less natural gas-fired generation in the United States during 2050 than in the Reference case. Higher natural gas prices make natural gas less economical for electric power generation compared with alternative sources, such as coal or renewables.

We project that natural gas’s share of U.S. electricity generation would fall from 34% in 2050 in the Reference Case to 31% in the No Interstate Natural Gas Pipeline Builds case. To make up for less natural gas-fired generation in the No Interstate Natural Gas Pipeline Builds case, electricity generation from renewables, coal, and nuclear sources increase.

U.S. electricity generation in two AEO2022 cases
Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 (AEO2022)

We project that restricting interstate U.S. natural gas pipeline capacity would only slightly lower energy-related carbon dioxide (CO2) emissions in the United States relative to the Reference case. Total CO2 from all fuel sources in 2050 are 4% lower in the No Interstate Natural Gas Pipeline Builds case than in the Reference case. The relatively small effect on CO2 emissions, despite the decline in natural gas consumption and growth in electric power generation from renewable sources, is due to our forecast of increased coal-fired power generation, which would be more carbon intensive than the natural gas-fired generation it displaces.

Principal contributor: Stephen York