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Must-know: Natural gas is a cleaner alternative to coal

Ingrid Pan, CFA

Natural gas gains popularity with power generators (Part 6 of 12)

(Continued from Part 5)

Coal-fired power plants have the highest output rate of carbon dioxide

Generally, natural gas burns more cleanly than coal. Coal has the highest carbon intensity among major fossil fuels, and as a result, coal-fired power plants have the highest output rate of carbon dioxide per kilowatt hour. According to the US Energy Information Administration (also known as the EIA), “Compared to the average air emissions from coal-fired generation, natural gas produces half as much carbon dioxide, less than a third as much nitrogen oxides, and one percent as much sulfur oxides at the power plant.”

Emissions in 1Q12 were the lowest in two decades, in part due to coal-to-gas switching

Due to increased use of natural gas versus coal for power generation, total carbon dioxide emissions from energy demand actually trended significantly downward despite the long-term trend of increasing as the US economy and energy demand grew (excluding the recessionary period post-2008, when energy demand and the economy contracted). According to the US Energy Information Administration, US carbon dioxide emissions in the first quarter (January through March) of 2012 were the lowest in two decades. The EIA notes that normally, carbon dioxide emissions are highest during the first quarter of the year due to increased use of fossil fuels to produce heat. During 1Q12, emissions were lower due to a warmer-than-normal winter that lowered home heating demand, reduced gasoline demand, and reduced in coal-fired electricity generation as a result of low natural gas prices.

In the first quarter of 2013, total carbon dioxide emissions from energy demand were 1,406 million metric tonnes—higher than the 1,345 million metric tonnes produced in 1Q12. However, during this period, more coal was burned relative to natural gas compared to 1Q12, as natural gas prices had fluctuated to be relatively higher during this period. Plus, 2013 represented a more normal winter in terms of temperature, and home heating demand was higher relative to the abnormally warm winter of 2012.




US Actual Heating Degree Days




US Normal Heating Degree Days




Coal Average Market Share




Natural Gas Average Market Share




Total Coal Generated Emissions
(Millions of Metric Tons)




Total Natural Gas Generated Emissions
(Millions of Metric Tons)




Natural Gas + Coal Generated Emissions
(Millions of Metric Tons)




Total CO2 Emissions from all sources (Millions of Metric Tons)




Note: Heating degree days, or HDD, measure how much colder than room temperature an area is. HDD data comes from the National Oceanic and Atmospheric Administration.

We can make a cleaner comparison using 1Q11 versus 1Q13, both of which had temperatures close to “normal” winter weather. However, despite similar temperatures in 1Q13, total CO2 emissions remained down from 2011—likely due to reduced coal-fired power generation. The average market share of coal in 1Q11 was 45%, which dropped to 40% in 1Q13. While coal lost 5% market share during this period, natural gas gained 5% market share. Meanwhile, emissions from natural gas and coal combined during 1Q13 totaled 851 million metric tonnes, compared to 873 million metric tonnes in 1Q11.

An increase in the use of natural gas over coal is seen as generally beneficial for emissions reduction, and this creates further impetus for power plants to choose natural gas as the preferred fuel for new capacity additions—especially if emissions regulation is expected to become increasingly stringent.

Continue to Part 7

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