Energy:

Economic and Other Implications of Switching from Coal to Natural Gas at the Capitol Power Plant and at Electricity-Generating Units Nationwide

GAO-08-601R: Published: May 1, 2008. Publicly Released: May 1, 2008.

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Elevated concentrations of greenhouse gases--carbon dioxide, methane, nitrous oxide, and several synthetic chemicals--in the atmosphere resulting from the combustion of fossil fuels and other sources have the potential to cause significant changes in the earth's climate. These potential impacts include shifts in sea level and weather patterns and could pose threats to coastal and other infrastructure. Concerns about the potential impacts of climate change have led the Congress to consider legislation that would place binding, nationwide limits on greenhouse gas emissions, and the House of Representatives' leadership has initiated efforts to decrease emissions attributable to its operations. Nearly all of the greenhouse gas emissions from House operations consist of carbon dioxide and are associated with electricity purchased from utilities and the combustion of fossil fuels in the Capitol Power Plant (CPP), which provides steam and chilled water for heating and cooling the Capitol building and 23 surrounding facilities. The Architect of the Capitol (AOC) operates CPP. In June 2007, the Chief Administrative Officer (CAO) of the House of Representatives released the Green the Capitol initiative (the initiative) at the direction of the Speaker and the Majority Leader. Among other goals, the initiative calls for the House of Representatives to operate in a carbon-neutral manner by the end of the 110th Congress (December 2008). Based on an AOC estimate, the House's share of the cost of achieving the fuel-switching goal would total $2.75 million in fiscal year 2008. The Omnibus Appropriations Act for that year appropriated $85.3 million for CPP. The House Appropriations Committee Explanatory Statement directs $3.27 million of this amount to the Green the Capitol initiative. In addition to the House's efforts to implement the Green the Capitol initiative, the Congress is considering proposals that would create nationwide limits on greenhouse gas emissions from electricity-generating units and other sectors of the economy. Within this context, the House Committee on Appropriations directed GAO to determine, in consultation with the Department of Energy, (1) the expected increase in natural gas use for House operations and the associated costs at CPP that would result from the Green the Capitol initiative, and (2) the ability of existing U.S. coal-burning, electricity-generating units to switch to burning natural gas and the associated economic implications.

According to our analysis, implementing the Green the Capitol initiative's fuel-switching directive to decrease carbon dioxide emissions from the CPP should lead to a 38 percent increase in natural gas use over the average annual quantity consumed between 2001 and 2007. We estimated that the fuel switching should cost about $1.4 million in fiscal year 2008 and could range from between $1.0 and $1.8 million depending on actual fuel costs, among other factors. Our cost estimates are less than the $2.75 million AOC budgeted for this purpose in fiscal year 2008, largely because we employed a different methodology than AOC when it prepared its estimates and maintained certain assumptions that AOC did not. Looking ahead, we estimate that the incremental cost of maintaining the adjusted fuel mix will range between $4.7 million and $8.3 million over the 2008 through 2012 time period, depending on fuel prices, the plant's output, and other factors. However, an important uncertainty with our estimates stems from the fact that AOC does not have complete, reliable information on the efficiency of its seven boilers in converting fuel into steam or on the full costs associated with the use of each fuel, taking into account factors such as fuel transportation and handling, and fuel-specific pollution control devices. With regard to the ability of U.S. coal-burning, electricity-generating units to switch to natural gas, according to available data and key stakeholders, the ability of these units to switch is limited by high natural gas prices, supply constraints, and existing infrastructure. In addition, increasing the nation's use of natural gas for electricity generation could result in adverse economic consequences. Fuel switching to natural gas also poses challenges related to existing infrastructure, including limited pipeline and storage capacity and technical and regulatory barriers to the conversion of existing coal plants. Large-scale fuel switching would require substantial investments in pipeline and storage capacity and new terminals to process imported natural gas--all of which would require regulatory approval. Because of these technical and other issues, large-scale shifting demand for electricity production from coal to natural gas would increase electricity prices, residential and commercial heating costs, and fuel costs for certain industries that consume large quantities of natural gas, including chemical and fertilizer manufacturers. Because of these and other concerns, key stakeholders said that switching coal plants to natural gas has occurred infrequently in the past and is not likely to occur in the future.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In June, 2008, the Architect of the Capitol issued a Report to Promote the Maximum Efficiency for the Operation of the U.S. Capitol Power Plant. This report included an analysis of the optimum operation of boilers in the plant to provide the most efficient operations possible under two scenarios: (1) without the requirements of the "Green the Capitol Initiative" that require the Architect to increase the use of natural gas and (2) with the requirements. This analysis showed that boiler operation would generally be more efficient under the first scenario. Congress has requested the Architect to convert from coal to natural gas as soon as possible. As a result, the Capitol Power Plant is maximizing th use of natural gas at the plant, and the Architect has requested funding to explore options to meet this requirement in an energy-efficient manner.

    Recommendation: Before adjusting the Capitol Power Plant's fuel mix beyond the level directed by the Green the Capitol initiative, the Acting Architect of the Capitol should consult with AOC's oversight committees in the Congress and evaluate the economic and environmental trade-offs associated with the use of each fuel at the plant, taking into account the efficiency of the plant's boilers, related fuel supply systems, and pollution control equipment.

    Agency Affected: Architect of the Capitol

 

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