U.S. Power Generation GHG reductions: Wind beats Gas

In this post we take a look at U.S. electricity generation and its greenhouse gas (GHG) emissions. We compare GHG reductions achieved by wind energy versus those from natural gas. The result may surprise you.

Natural gas generates more than 31% of U.S. electricity while the comparable figure for wind is 6%. Given the low GHG emissions associated with burning natural gas instead of coal, one might think natural gas reduces GHGs significantly more than wind energy.

Not so and it hasn’t been since February 2016.

Choosing, and comparing with, a baseline. In order to be able to compare the emissions savings of both fuel types, one needs to start with an appropriate baseline. The one we believe to be logical is the average, system-wide, GHG emissions arising from the generation of each unit of electricity. This data, going back several years, is readily available from the Energy Information Administration and is simply the total power sector GHG emissions divided by total electricity generation. The following graph shows this information for the entire power generation system (black line), natural gas (orange line) and wind energy (blue line) for the period from January 2007 through August 2017.

In the last month available (August 2017), the system average emissions were 0.44 metric tonnes (mt) of GHGs per megawatt hour (MWh) of generation. Consequently each unit of natural gas generation reduced system GHGs by 50 kilograms/MWh (0.44 mt – 0.39 mt). By comparison, wind reduced system emissions by 0.44mt/MWh or almost nine times as much.

Converting emissions rate to annual emissions. The conversion of GHG savings per MWh to annual tonnes saved is straightforward and involves multiplying the savings rate by the amount of electricity generated. This calculation shows, in August 2017, a rolling 12-month GHG savings of 62.3 million metric tonnes (mmt) for gas plant, and 105.4 mmt for wind.

The following shows the rolling 12-month savings achieved by wind (blue line) and natural gas (orange line) from January 2007 to August 2017.

Making sense of it all.  Since 2008 there has been a steady decline in the number of coal generation plants in the U.S.. Emission factors of coal plants average approximately 1 mt/MWh and so, as coal has been retired and replaced with gas (0.4 mt/MWh), wind (0 mt/MWh) and solar (0 mt/MWh), the system average emission rate has fallen dramatically – this is illustrated in the first chart by the black line which declined 25% from a peak of 0.58 mt/MWh in January 2007 to 0.44 mt/MWh in August 2017. Over the same period the emissions rate of gas plant has been reasonably static and as a result the annualized GHG savings achieved by gas plant has, despite the replacement of coal with gas, declined from a peak of 155 mmt in March 2008 to a low of 62.3 mmt in August 2017.

Over the same time period wind generation increased from 0.6% of the U.S. total (January 2007) to 6% (August 2017) and the annual emission savings increased from 14 mmt to 105 mmt.

If you have read this far you will probably also be interested to know that wind energy GHG savings first passed those of natural gas in February 2016. And they’ve not looked back since.

Why this matters. We are moving rapidly towards a carbon constrained world and most professionals in the utility industry believe it is only a matter of time before there is a formal carbon price. In such a world, those same executives are anxious to reduce their carbon exposure and wind energy represents a great way of doing that. The GHG savings of wind are very significant: consider that, at a modest carbon price of $20/tonne, the 105.4 mmt saved by wind in the last 12 months represents an avoided carbon charge of $2.1 billion annually . Or, to put it another way, $8.68 for every MWh of wind generation (242.65 terawatt hours). That’s not a figure to be sneezed at especially when you consider it represents around 10% of the current wholesale electricity price.

Another way to look on it: every time one MWh of generation from a wind turbine displaces a MWh from coal it will avoid $20 (1 mt/MWh * $20) of carbon charges. Each time a MWh from wind displaces gas, it will avoid $7.80 (0.39 mt/MWh * $20) of carbon charges.  Even without including carbon charging, wind is directly cost-competitive with natural gas and significantly cheaper than coal. Include a carbon price and wind energy looks even better.

One more reason why, regardless of federal policy, utility companies across North America are rapidly expanding into wind energy.