The costs associated with the development of energy resources and protection of the environment have grown in importance to the energy industry, federal and state governments, and energy customers. The INGAA Foundation (Foundation) engaged R. J. Rudden Associates, Inc. (RJRA) to review available analyses and perform a set of fuel cycle analyses to contribute to the national debate on how to systematically assess the economic and environmental benefits of natural gas in selected end-uses.
Each fuel has a cycle, also called the "energy trajectory," through which it passes as
society produces and uses the fuel. This cycle has 11 major steps:
- Exploration and Extraction,
- Raw Materials Processing,
- Manufacturing and Construction,
- Conversion to Electricity,
- Distribution and Transmission,
- Waste Disposal,
- Waste Recycling,
- End-Use, and
Important policy, methodological, and data issues need resolution as part of the complex analytic undertaking of fuel cycle analysis. Most fuel cycle studies completed to date focus on the environmental effects of energy production and use. Many incorporate repackaged notions from the technology assessment, environmental impact assessment, and other comprehensive planning movements.
A comparative fuel cycle analysis with appropriate treatment of externalities can aid in assessing natural gas versus alternative fuels for a variety of strategically important potential growth markets. The fuel cycle analyses in this study address three major aspects of the fuel cycle: energy efficiency, economics, and environmental effects.
The first part of this study is a comparative fuel cycle analysis between coal and natural gas for electric power generation. The second part builds on the first and compares the full fuel cycles of electric power to the direct use of gas in residential water heaters.
The Mid-Atlantic and West (non-California) regions were chosen for the study based on their different geographic locations and because they provide a comparison of high sulfur and low sulfur coal alternatives versus natural gas. A specific electric utility within each region was chosen to provide required cost statistics.
There are atmospheric emissions at most of the steps in the natural gas and coal fuel cycles. The exceptions occur in the distribution and end-use of electricity where there are no emissions. Despite these exceptions, natural gas has the lowest emissions. Atmospheric emissions are the only environmental effects described here because the emissions are pervasive, relatively difficult to prevent, and impossible to clean up after release. Liquid releases are easier to prevent, less pervasive, and can be cleaned up. The only emission described in the environmental comparisons which has a quantifiable cost is SO, from the conversion of coal to electricity. The costs applied to SO, are shown in Tables 111-3 through 111-7.
In the West (non-California) at a 65 percent capacity factor, electric power from the gas CC unit has an annuity cost of 5.74 cents per kWh and 7.49 cents per kWh for the coal unit. Operating at a 30 percent capacity factor the West (non-California) gas and coal units provide electricity at annuity costs of 7.53 and 13.09 cents per kwh, respectively. The advanced technology gas-fired CC unit, which is expected to be in commercial use by the year 2000 will provide electricity at costs substantially lower than the less developed advanced technology pulverized coal unit.
In summary, all the comparisons show that natural gas has substantial economic, efficiency, and environmental benefits over the competing fuels.