For the last 35 years, and continuing today, natural gas has been promoted as a more environmentally appropriate fuel for electricity generation than coal. As recently as the current 2020 U.S. Presidential campaign, candidate Joe Biden has advocated replacing aging coal-fired power plants with natural gas-fired plants.
However, an analysis by a team of researchers at the University of California Irvine, “Committed Emissions of the U.S. Power Sector, 2000-2018”, suggests the view that natural gas is a good transitional fuel between coal and renewables may not be correct. The peer-reviewed research goes so far as to suggest that natural gas may not be a much better, or any better, energy source than the coal it replaces when the total lifetime of the plant is considered.
The analysis states that annual carbon dioxide (CO2) emissions from the U.S. power sector decreased 24% from 2000 to 2018, while carbon intensity (CO2 per unit of electricity generated) declined by 34%. This reduction has often been attributed to replacement of coal facilities by natural gas-fuelled generation. However, according to the research, fuel substitution does not tell the whole story.
During the same period, many older plants were replaced by newer, more efficient technology. Thus, regardless of fuel used, the greater efficiencies in generating technology have accounted for some of the decrease in greenhouse gas (GHG) emissions. Secondly, the energy intensity of the U.S. economy — the amount of energy required to power the economy — has moved to greater efficiency. Thirdly, there is the lingering effect of the 2008 recession and the reduction of electricity generation emissions caused by the reduced use of electricity during the recession. Finally, power from wind and solar sources has grown from less than 1% of generation in 2000 to nearly 9% in 2018. These factors have significantly lowered GHG emissions by the U.S. electricity sector during 2000-2018.
The growth in natural gas-powered generation during the period under study greatly exceeds the loss of coal-fired generation capacity, resulting in essentially no change in total emissions from combustion-powered electricity generation. Unrealized lifetime emissions from combustion-powered generating facilities actually increased by almost 75%, suggesting that if overall GHG emissions reduction targets are to be achieved in the electricity sector, a significant number of plants will need to be closed before the end of their projected lifetime or utilized at less than their design capacity. In either case, lifetime gross revenue projections may not be achieved.
The analysis also reviews the literature on methane emissions from use of natural gas. According to the U.S. Environmental Protection Agency, methane leakage is about 1.4%, though other studies suggest that this may be an underestimate. Methane leakage is not taken into account in power sector GHG estimates, but at 3% leakage the benefit of natural gas as against coal over the related generating plant lifecycles totally disappears.
The authors point out that there are inherent substantial uncertainties in estimating future emissions. Reducing the current lifetime of current coal and natural gas plants from 50 to 40 years, reducing the capacity factor from 60% to 50%, or requiring the installation of carbon capture and storage technology would be among the actions lowering GHG emissions. But all of these, as well as many other approaches, would potentially impact negatively the economics of coal- and gas-powered electricity generation.
The data show that remaining lifetime committed emissions from a generating station, or from all generating stations, are dependent on how long and how often the plant or plants are used. This analysis would be of interest to investors in the combustion-powered electricity generating sector, but the basic principles in this research might also be of interest to investors in other sectors likely to be impacted by changes in society’s requirements.
In any sector where operations may be impacted by environmental or societal requirements, the possibility that a switch from one mode of operation to another will not provide the expected benefit needs to be taken into account. For example, a simple analysis of the chemistry and physics of coal burning and natural gas burning suggests that natural gas is the environmentally preferred fuel.
A more complex analysis, such as that conducted by this team of researchers, suggests that the benefits of natural gas over coal, when calculated in a simple way, may not be achieved when all lifecycle aspects are taken into account. Investors in many industrial sectors may wish to take note when they review the prospects for their investments in a post-pandemic world.
Colin Isaacs is a scientist and analyst with CIAL Group who focuses on sustainable development for business. He was selected by Environment Canada to be the principal author of the waste management chapter in the report The State of Canada’s Environment 1991. Colin can be reached at (416) 410-0432 (phone), (416) 362-5231 (fax), and firstname.lastname@example.org (e-mail).