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Utility Sector Could Contribute One-Third of U.S. Kyoto Reduction Pledge at Little Cost Through Switch to Natural Gas

November 2000

Much of the debate within the United States over U.S. commitments to reduce greenhouse emissions under the 1997 Kyoto Protocol concerns the costs to industry — and the American public. But a new study by the Environmental Law Institute® shows how to achieve one-third of the needed drop at relatively low cost. The reduction comes from switching half of the nation’s coal-fired electricity generation to clean-burning natural gas over the next 10 years. The year 2010 is the mid-point of the 2008-2012 target set under the Kyoto agreement.

The study was released today as the parties to the 1992 Framework Convention on Climate Change were meeting in The Hague to further develop the commitments industrial countries made to reduce greenhouse emissions at Kyoto. The United States pledged at Kyoto to reduce its carbon dioxide emissions by 7 percent below its 1990 “base level.”

The dramatic drop in carbon dioxide emissions comes from a computer model that estimates the effects of a 50-percent reduction in coal generation over the next decade. Under the model, the cost to the American consumer for electricity would be 10 percent higher in 2010 compared to a business-as-usual approach, 6.6 cents per kilowatt hour instead of 6.0 cents. But the 6.6-cent rate is about what consumers were paying in 1999, so electric bills would actually remain essentially the same in the long run. The model conservatively assumes that natural gas prices will almost double during the phase-in period, and the study’s long-term conclusions are not affected by the large spike in gas prices already underway as the United States faces an unusually cold winter at the same time as a tight gas market.

The greenhouse reduction emerges as a “by-product” of air pollution reductions originally being studied by the Institute. The U.S. Environmental Protection Agency is in the process of requiring power plants to sharply cut nitrogen oxides. At least 19 eastern states will have to produce major nitrogen reductions by 2003. To carry out the federal mandate, states are currently submitting “state implementation plans” to the Agency.

Under the model, nitrogen oxides, which cause both acid rain and smog, would be reduced by 40 percent. In addition, sulfur dioxide, the chief cause of acid rain, plunges by 50 percent. Emissions of dangerous air toxics such as mercury also drop dramatically. The study was based on a sophisticated computer model of the utility industry constructed by Resources for the Future, an economics research organization.

“Overall, coal-fired plants, most of which were built before 1980, emit roughly two-thirds of the nation’s sulfur dioxide and one-third of total loading of nitrogen oxides,” said ELI Senior Attorney Byron Swift, Director of the Institute’s Energy and Innovation Center. “Modern natural gas turbines are far more efficient and cleaner, producing none or very little of the regulated air pollutants emitted by coal-fired plants. Thus, such a switchover would go a long way toward solving the central pollution problems addressed by the Clean Air Act and U.S. international climate change commitments.”

In a sense, the greenhouse benefits come as a free bonus. According to Swift, new “combined cycle” gas turbines are almost twice as efficient in producing power from fossil fuel, which means they produce half of the carbon dioxide, the chief greenhouse gas. Thus, according to the model, the switchover would reduce carbon from the utility sector to below its 1990 level — about a third of the total national reduction needed to meet the level established by the Kyoto Protocol.

“It is important to note that the model is an economic exercise,” said Swift. “While it includes the capital costs and commodity costs of such a switch, we also need to be concerned about the social effects on people in the coal and gas industries and the environmental impacts of expanded natural gas production in comparison to the those of coal mining. But on the whole, society reaps a huge benefit outside the scope of the model: cleaner air through reduction of four major pollutants.”

Cleaner Power: The Benefits and Costs of Moving from Coal to Natural Gas Power Generation can be downloaded for free or ordered by calling (800) 433-5120 or sending an email to