Commodity Market Report
North America gas markets sensitivity: No Carbon Policy, developed from the H2 2020 long-term outlook
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Report summary
Wood Mackenzie's H2 2020 long-term outlook base case assumes a federal long-term carbon policy, a flat US carbon tax of $6/short ton (st) beginning in 2026 that increases to $30/st by 2045. However, our No Carbon Policy sensitivity assumes a future without any US federal carbon pricing. In this scenario, coal plants do not retire as quickly and about 26 GW of coal capacity is added compared to the base case. The renewable generation build will continue to increase but at a slower pace. Power demand for gas will be lower overall, but the impact is more muted post-2040 and the story varies by region. Key questions addressed in the analysis: • How much gas demand in the power sector is lost to coal? • Will all regions see lower gas burn? • What is the effect of lower overall power burn on Henry Hub and regional basis prices? • Which supply regions will be most affected?
Table of contents
- This No Carbon case represents our view on the gas market in the absence of any kind of federal carbon policy but with the continuance of non-federal CO 2 cap-and-trade programs and regional CO 2 markets, such as California-AB32,RGGI and Canadian initiatives.
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