United States Government Accountability Office

Washington, DC 20548 

May 1, 2008 

The Honorable Mary L. Landrieu 

Chair 

The Honorable Lamar Alexander 

Ranking Member 

Subcommittee on Legislative Branch 

Committee on Appropriations 

United States Senate 

The Honorable Debbie Wasserman Schultz 

Chair 

The Honorable Tom Latham 

Ranking Member 

Subcommittee on Legislative Branch 

Committee on Appropriations 

House of Representatives 

Subject: Economic and Other Implications of Switching from Coal to Natural Gas 

at the Capitol Power Plant and at Electricity-Generating Units Nationwide 

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 

 GAO-08-601R Implications of Switching from Coal to Natural Gas 
and the Majority Leader. 1 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). Carbon-neutral, as defined in the initiative, means that 

operations produce no net contribution to greenhouse gas emissions. The initiative 

outlines several strategies to achieve the goal of carbon neutrality, including 

operating CPP with natural gas instead of coal to meet the needs of the House. 

(Natural gas generates about half as much carbon dioxide as coal when burned but 

costs about four times more for a comparable amount of energy input.)2

 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.3

 

CPP produces steam using a combination of seven boilers—two boilers that primarily 

burn coal, but could also burn natural gas, and five boilers that burn fuel oil or 

natural gas. These boilers burn fuel to convert water to steam that, in turn, provides 

energy primarily for space heating but they do not generate electricity.4

 The total 

capacity of these boilers is over 40 percent higher than the maximum capacity 

required at any given time, and the plant has the flexibility to switch among the three 

different fuels or burn a combination of fuels. The percentage of energy input from 

each fuel has varied from year to year, with an average fuel mix of 43 percent natural 

gas, 47 percent coal, and 10 percent fuel oil between 2001 and 2007. The overall 

amount of steam required depends on numerous factors, including weather, the 

adoption of voluntary and federally mandated energy-efficiency and conservation 

measures, and the addition of new buildings (such as the Capitol Visitor Center, 

scheduled to open in late 2008). 

 1

Chief Administrative Officer of the House of Representatives, Final Report, Green the Capitol 

Initiative (June 21, 2007). The Green the Capitol initiative establishes the goal of carbon neutrality for 

the House of Representatives only, whereas CPP also serves the Senate and additional congressional 

buildings. 

2

According to the Department of Energy’s Energy Information Administration, the amount of carbon

dioxide emitted from burning pipeline natural gas is 117.08 pounds per million British thermal units 

(Btu) of energy. The amount generated from burning coal ranges from 205.3 pounds to 227.4 pounds

per million Btu and depends on the specific type of coal burned. 

3

Consolidated Appropriations Act, 2008, Committee Print of the House Committee on Appropriations 

on H.R. 2764 / Public Law 110-161 (Legislative Text and Explanatory Statement), 153 Cong. Rec. 

H15479, H15741 (Dec. 17, 2007). According to a House Appropriations Committee summary of the 

initial House-passed legislative branch appropriations bill, the Green the Capitol initiative funding in 

the earlier bill included "...$2.7 million to shift from coal to cleaner burning natural gas for heating

needs, $520,000 to switch to 100 percent renewable wind power for electrical needs, $500,000 for an 

ethanol gas station for House automobiles, and $100,000 for energy efficient compact florescent light 

bulbs." (See http://appropriations.house.gov/press_releases_2007.aspx, follow link under “August.”)

4

In addition to space heating, these boilers provide energy for other minor services, including

humidification and food services. The House of Representatives purchases electricity from an

external provider. 

Page 2 GAO-08-601R Implications of Switching from Coal to Natural Gas 
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. 

Many of these proposals would involve the use of mechanisms that create an

economic incentive for emitters to decrease their emissions by limiting the overall 

allowable quantity of emissions or by placing a direct price on each unit of emissions. 

Because the combustion of fossil fuels results in greenhouse gas emissions, efforts to 

limit emissions could lead to overall shifts in the prices and demand for different 

types of fuels. For example, the Department of Energy has projected that limits on 

greenhouse gases would shift the nation’s demand for fossil fuels by decreasing the 

demand for coal and increasing the demand for natural gas. In 2006, production of 

electricity from coal totaled 49 percent of the nation’s net generation, followed by 20 

percent from natural gas, 19 percent from nuclear power, and 7 percent from 

hydroelectric power, with lesser quantities produced from other renewable sources, 

petroleum, and other fuels. These percentages have remained relatively stable in 

recent years with a slight increase in natural gas generation and a slight decrease in 

generation from coal. In principle, all coal units could be physically switched from 

coal to natural gas with varying degrees of modification. It would also be possible to 

build new gas-fired power plants to replace coal-fired power plants. These 

modifications or replacements would require different amounts of investment in the 

power plants themselves, as well as related infrastructure. Legislative proposals that 

would impose limits on greenhouse gas emissions from the electricity sector raise 

important questions about the potential supply and demand for different fuels under 

different scenarios, as well as about the ability of existing generating units to switch 

from burning high-emitting fuels, such as coal, to lower-emitting fuels, such as natural 

gas. Moreover, such proposals prompt questions about the overall economic benefits 

and costs that would accrue. 

Within this context, the House Committee on Appropriations directed us 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. coalburning, electricity-generating units to switch to burning natural gas and the 

associated economic implications. 

To respond to the first objective, we first reviewed two studies prepared for the 

House CAO. One study was an analysis prepared by AOC that served as the basis for 

the fuel-switching funding estimate in the Green the Capitol initiative presented by 

CAO to the House leadership. The other study was a subsequent analysis prepared by 

the Department of Energy’s Lawrence Berkeley National Laboratory (LBNL). We 

then determined the average annual quantity of each fuel (measured in British 

thermal units or Btu) consumed by the plant between 2001 and 2007. Next, we 

calculated the proportion of the plant’s steam output consumed by buildings operated 

by the House of Representatives, which we estimated was 29 percent based on the 

total square footage of buildings served by the plant. We assumed that the fuelswitching approach outlined in the initiative required that this proportion of the 

plant’s output be derived entirely from natural gas. The remaining 71 percent would 

Page 3 GAO-08-601R Implications of Switching from Coal to Natural Gas 
continue to reflect the plant’s historical average of 43 percent natural gas, 47 percent 

coal, and 10 percent fuel oil. We did not assume a change in the quantity of fuel oil 

that would be burned by the plant because of technical considerations at the plant 

that require the use of fuel oil as a back-up fuel. We then calculated the incremental 

cost of achieving an adjusted fuel mix. We made this calculation assuming that, 

beginning in 2008, the demand for the plant’s output would decrease by 1 percent 

annually from the 2001 through 2007 baseline due to energy efficiency legislation and 

additions to the Capitol complex. We then estimated future CPP cost per unit of fuel 

for the period from 2008 through 2012 using historical data on AOC’s fuel 

expenditures and projections of fuel prices for the industrial sector from the Annual 

Energy Outlook of the Energy Information Administration (EIA) within the 

Department of Energy. We adjusted EIA’s projected fuel prices to account for 

historical differences in the average prices paid by industrial users of these fuels and 

the prices paid by AOC. All of our cost estimates are in constant 2006 dollars. In 

preparing our estimates, we consulted with AOC staff, officials representing the 

House CAO, and the Department of Energy (including LBNL and EIA). We also 

reviewed relevant studies prepared by these agencies. 

To respond to the second objective, we analyzed available data from the Department 

of Energy and other sources. We also obtained information from key stakeholders 

identified in discussions with the department that represent the electricity 

generation, natural gas, and coal industries using written interview questions. 

Enclosure I provides a more detailed description of our scope and methodology. We 

conducted our audit work between October 2007 and April 2008 in accordance with 

generally accepted government auditing standards. Those standards require that we 

plan and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Summary 

According to our analysis, implementing the Green the Capitol initiative’s fuelswitching 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. Specifically, AOC 

based its estimates on a scenario in which the plant would eliminate its use of coal 

altogether and burn natural gas exclusively, for a total cost of $7.78 million. Of this 

total cost, AOC estimated that $2.75 million represented the portion that could be 

applied to the House, based on the number of square feet of building space served by 

the plant. In its estimate, AOC also did not account for the fact that the Ford House 

Office Building obtains steam from the General Services Administration rather than 

Page 4 GAO-08-601R Implications of Switching from Coal to Natural Gas 
from CPP. As a result, AOC’s plans to fulfill the Green the Capitol initiative involve 

increasing natural gas use by 48 percent, an increase that far exceeds the initiative’s 

fuel-switching recommendation. In contrast, our analysis focused on estimating the 

incremental cost of adjusting the plant’s fuel mix such that the portion of its output 

that serves buildings operated by the House (about 29 percent on a square footage 

basis) would consist entirely of natural gas. This equates to increasing the level of 

natural gas from 43 percent to 60 percent of the historical fuel mix, a net difference of 

17 percentage points and a 38 percent increase in overall natural gas consumption. 

Importantly, the plant’s existing natural gas boilers have the capacity to 

accommodate this increase in natural gas use and CPP would not have to eliminate 

its use of coal altogether. 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. As a result, AOC does not have all the 

information it needs to make fully informed decisions about operating the plant as 

efficiently or cost-effectively as possible. While the increased use of natural gas and 

decreased use of coal will increase costs above a business-as-usual baseline scenario, 

the initiative would likely generate other important benefits. These benefits include 

decreased emissions of carbon dioxide and pollutants that cause smog and acid rain, 

as well as potential reductions in the plant’s operating costs associated with the 

transportation, storage, handling, and treatment of coal and related waste streams. 

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. Natural gas currently 

costs about four times more than coal per British thermal unit and has shown a 

relatively higher rate of price increases and volatility over time relative to coal,

according to EIA. In addition to higher fuel costs, supply constraints limit the 

practicality of replacing electricity generated from coal with natural gas. The United 

States has limited capability to meet the growing demand for natural gas with 

domestic production and would need to become increasingly dependent on 

international supplies of natural gas if there was widespread switching to natural gas 

from coal. Even taking imported natural gas into account, key stakeholders doubted 

whether natural gas supply could meet the demand if plant operators decided to 

pursue fuel switching. 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. With respect to the conversion of existing coal-burning plants, 

stakeholders said that it would be more feasible and cost-effective to construct new 

Page 5 GAO-08-601R Implications of Switching from Coal to Natural Gas 
natural gas units or dispatch excess capacity at existing natural gas units than to 

convert a coal plant because of technical and economic factors, among other reasons. 

For example, retrofitting an existing coal unit to burn natural gas would require 

significant capital expenditures, while also potentially decreasing the unit’s overall 

efficiency in converting fuel input into electricity. 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. 

We are recommending that, 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 consult with AOC’s oversight committees in the Congress and evaluate 

the economic and environmental tradeoffs 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. 

We provided a draft copy of this report to the Acting Architect of the Capitol for 

review and comment. AOC provided comments via electronic mail. AOC officials 

said that they agreed with our cost estimate under the high fuel price scenario but 

expressed concerns about the potential level of resources that would be required to 

respond to our recommendation. We subsequently met with AOC officials who said 

that they were concerned that implementing our recommendation would require 

them to collect exact information on the efficiency of its boilers and fuel supply 

systems. Based on this discussion, we adjusted the wording of the recommendation 

to clarify that this was not our intent. AOC also provided a number of technical 

clarifications regarding the plant’s operation and their cost estimates for fuel 

switching, which we incorporated into our report as appropriate. 

Fuel Switching at the Capitol Power Plant Is Expected to Require a 38 

Percent Increase in Natural Gas Use at a Cost of about $1.4 Million in Fiscal 

Year 2008 

Based on available data and key assumptions about the plant’s operation and future 

fuel costs, we estimated that fulfilling the Green the Capitol initiative’s fuel-switching 

directive would require the plant to increase its natural gas use by 38 percent relative 

to its baseline level of fuel consumption between 2001 and 2007. As a portion of the 

plant’s total fuel mix, natural gas would increase from about 43 percent of overall 

energy input to about 60 percent of input. Using information from the AOC on its fuel 

expenditures and fuel price projections from EIA, we estimate that implementing the 

fuel-switching directive could range in cost from $1.0 to $1.8 million in fiscal year 

2008. 

Because our calculations involve projections and assumptions about key variables, 

the estimates are inherently uncertain and actual expenditures may vary depending 

Page 6 GAO-08-601R Implications of Switching from Coal to Natural Gas 
on changes to these variables. Key variables and assumptions underlying our 

estimates include the following: 

• Baseline fuel consumption and steam production. We estimated the 

quantity of additional natural gas required to fulfill the initiative’s fuelswitching goal for the year 2008. We assumed that the fuel-switching 

approach outlined in the initiative required that 29 percent of the plant’s 

output be derived entirely from natural gas. The 29 percent figure is based 

on an estimate of the House’s share of the total square footage of buildings 

served by the plant. The remaining 71 percent would continue to reflect 

the average fuel mix over the 2001 to 2007 time period. 5 Using an average, 

as opposed to a single year’s level of production, provides a more realistic 

picture of the plant’s historical operation. We held the amount of fuel oil 

constant because of technical considerations at the plant that require using 

oil as a backup fuel. 

• Boiler efficiency. We assumed that each of the seven boilers at the power 

plant converts fuel into steam with equal efficiency. We made this 

assumption based on research conducted by an independent consultant to 

GAO, a previous analysis conducted by Ross Associates (a consultant to 

AOC), and discussions with AOC staff. Overall, we found 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 transportation, 

handling, and pollution control. As a result, AOC does not have all the 

information it needs to make fully informed decisions about operating the 

plant as efficiently or cost-effectively as possible. While the available data 

suggests that our assumption is reasonable, the lack of complete, reliable 

data on efficiency of each of the boilers and related fuel supply equipment 

represents an important uncertainty with our analysis. 

• Fuel costs. To estimate the cost of each fuel in fiscal year 2008, we used 

fuel price projections from EIA’ s Annual Energy Outlook 2008, which we 

then adjusted to account for historical differences in the prices paid by 

AOC versus the average price paid by industrial consumers.6

 5

The plant’s coal boilers underwent a number of renovations and repairs, including a grate 

replacement, in 2005 and 2006. This may have decreased the amount of coal that the plant would have

otherwise burned in those years, leading to a lower average baseline level of coal use. 

 

6

The difference between AOC’s per unit cost of a given fuel and the corresponding average U.S. price 

of the same fuel in the industrial sector can be due to various factors, including transportation costs. 

Page 7 GAO-08-601R Implications of Switching from Coal to Natural Gas 
Figure 1: Projected Change in CPP Fuel Use 

 

Note: Due to rounding, percentages do not add up to 100 percent in both charts. 

Our Estimates Are Substantially Lower than Previous Estimates and the Level of 

Funding AOC Budgeted for Fuel Switching at the Plant

Our estimated costs of increasing natural gas use at CPP to meet the initiative’s fuelswitching directive fall well below a previous estimate prepared by AOC. 

Specifically, AOC estimated that the cost in fiscal year 2008 would total about $2.75 

million. In fiscal year 2009, AOC is requesting a much lower amount—1.22 million—to 

complete the fuel switch. In its own analysis, LBNL estimated the total cost for fiscal 

year 2008 at about $1.88 million. 

The discrepancy between our estimates and those developed by AOC and LBNL 

stems from variations in the methodologies each party employed. Specifically, AOC’s 

analysis involved a scenario in which the plant would burn only natural gas and 

eliminate the use of coal and fuel oil altogether. This analysis estimated that 

switching the entire plant to natural gas would cost a total of about $7.8 million in 

fiscal year 2008. Based on this analysis, AOC then estimated that the cost of fuel 

switching under the initiative would equal approximately 35 percent of the total cost 

of switching the entire plant. The 35 percent figure was based on the assumption that 

the House consumed that proportion of the plant’s total output, based on the number 

of square feet of building space served by the plant. This yielded an estimate of $2.75 

million to switch fuels in fiscal year 2008. To fulfill the initiative’s fuel switching 

directive, AOC officials said that they planned to increase natural gas use from 42 

percent of fuel use to 62 percent. According to our analysis, this would increase 

natural gas use beyond the initiative’s goals. 

The analysis conducted by LBNL estimated the total cost at $1.88 million in 2008, a 

substantially lower figure than the previous estimate developed by AOC. Key 

differences between our methodology and the methodologies employed by AOC and 

LBNL follow: 

Page 8 GAO-08-601R Implications of Switching from Coal to Natural Gas 
• We based our cost estimates on EIA fuel price projections for fiscal year 2008 

and used AOC historical cost data from 2001 through 2007 to estimate the actual 

cost of the fuel after delivery. In contrast, AOC’s analysis used an average of 

their natural gas costs from 2005 through 2007, which may have inflated the cost 

estimates, since there were some very high natural gas price spikes during these 

years. LBNL used natural gas prices from fiscal year 2007. 

• We assumed that House buildings use approximately 29 percent of the steam 

generated by the plant, based on data from AOC’s 2006 Annual Report to 

Congress. We excluded the Ford House Office building from our analysis 

because it obtains steam from General Services Administration rather than from 

the plant. In contrast, AOC and LBNL included the Ford Building, which resulted 

in estimates of 31 percent and 35 percent, respectively. 

 

Estimated Annual Fuel-Switching Costs Are Expected to Range from $1.2 to $1.4 

Million between 2008 and 2012

In addition to estimating the costs for fiscal year 2008, we projected the costs of 

maintaining the adjusted fuel mix over the 2008 through 2012 time period. 

Specifically, we estimated that CPP would spend roughly $1.2 to $1.4 million per year 

over the next 5 years. This amount could run as high as $1.8 million in fiscal year 

2009 or as low as $823,000 in 2012, depending on fuel prices. Table 1 summarizes the 

potential future costs of maintaining an adjusted fuel mix at CPP and, because of 

uncertainties about fuel price projections, includes low and high fuel price scenarios. 

Table 1: Projected Cost of Maintaining Adjusted Fuel Mix, 2008 through 

2012 

Fiscal

year

2008 $1,002,632

L B

s

H

$1,385,488 $1,768,343

ow fuel price

scenario

aseline

cenario

igh fuel price

scenario

2009 1,045,606 1,435,660 1,825,714

2010 952,500 1,316,872 1,681,244 

2011 868,061 1,210,391 1,552,721

2012 823,029 1,151,236 1,479,443

Totals $4,691,828 $6,499,647 $8,307,465

Similar to cal year 200 e, these s rely on a number of 

assumptions which, if changed, would substantially affect the overall cost. In 

addition to the assumptions cited above, the following factors and assumptions could 

affect the accuracy of our estimates: 

• Fuel demand. We estimated that the demand for the plant’s steam would 

ual to

our fis 8 estimat projection

decline by 1 percent annually relative to a baseline level of demand eq

that we derived by averaging the annual demand for fiscal years 2001 

Page 9 GAO-08-601R Implications of Switching from Coal to Natural Gas 
through 2007. We based the 1 percent annual decline in demand on two 

important and partially offsetting considerations:

o Additions to the Capitol Complex, including the Capitol Visitor 

Because over a quarter of

• Fuel costs. We used fuel price projections for the U.S. industrial sector from 

EIA fo

estimat

unit cost s,

we const ario for the years

2008 through 2012 based on measures of variability in the historical prices of 

Of these

greatest y

of factor

severe w

upward ral gas prices that, according to EIA, will continue until 2009. 

tarting in 2010, EIA expects natural gas prices to decline until approximately 2016. 

r

ts

Center, are expected to increase the plant’s steam demand by 1 

percent each year through 2025. 

o The Energy Policy Act of 2005 requires a 2 percent reduction in

energy use per year for federal buildings.

House energy use is for heating, the act’s implementation may 

significantly reduce steam demand over time. 

r the years 2008 through 2012 and adjusted them to reflect our 

e of the historical difference between these prices and the AOC perof each fuel. Because of the uncertainty of fuel price projection

ructed a low-price scenario and a high-price scen

these fuels.

variables and assumptions, those associated with future fuel prices pose the

uncertainty. As we have previously reported, prices may depend on a variet

s, such as supply, demand, available infrastructure, market conditions, and 

eather events.

7

 Since 1999, market conditions generally have fostered an 

trend in natu

S

Other important considerations can affect demand for the plant’s services, including 

planned or future investments in energy efficiency, weather, and changes in energy o

environmental legislation. Because of the uncertain and potentially offsetting effec

of these factors on demand for the plant’s services, we did not address them in our 

estimates. 

Fuel Switching Would Reduce Carbon Dioxide Emissions at an Average Cost of about

$139 per Ton; Other Benefits May Also Accrue

Based on our cost projections for fiscal year 2008, we estimate that the fuel switch 

would yield carb 8 on dioxide reductions of about 9,970 metric tons per year at an

verage cost of $139 per ton. We developed this estimate using our $1.4 million cost 

n market, the European Union’s

missions Trading Scheme, currently prices a metric ton of carbon at approximately 

 

a

estimate as a base price and applying EIA’s carbon dioxide conversion factors for 

coal and natural gas. (The world’s largest carbo

E

7

GAO, Natural Gas: Factors Affecting Prices and Potential Impacts on Consumers, GAO-06-420T

(Washington, D.C.: Feb. 13, 2006). 

8

A metric ton is equal to 2,205 pounds, while a short ton, a measurement used in the United States is

equal to 2,000 pounds. 

Page 10 GAO-08-601R Implications of Switching from Coal to Natural Gas
$37.) Additional information on the cost-effectiveness of the fuel-switching strategy

relative to other carbon dioxide abatement options would help inform future deci

making on fuel switching and related investments intended to decrease emissions. In

April 2007, we recommended that legislative branch agencies establish a schedule

conducting energy audits and implement selected projects as part of a plan to red

emissions.

sion

for

uce

cts. For example, nitrogen oxides may exacerbate existing 

onditions such as asthma, and particulate matter has been linked to heart attacks 

d fine

Potential for Fuel Switching from Coal

9

 Such audits have the potential to identify projects that compare favorably

to fuel switching. 

In addition to reducing carbon dioxide emissions, decreasing the plant’s reliance on 

coal may yield other environmental and health benefits. While coal currently costs 

less than natural gas, coal’s combustion generally produces more carbon dioxide and 

air pollutants compared to natural gas. These pollutants, in turn, pose a variety of 

adverse health effe

c

and chronic bronchitis. Furthermore, acid rain may occur when the sulfur dioxide 

produced in the combustion of coal at the plant reacts with other chemicals in the 

atmosphere to form sulfuric acid. Burning less coal may also help Washington, D.C., 

and neighboring jurisdictions in their efforts to achieve compliance with federal air

quality standards. Currently, the city is noncompliant for ground-level ozone an

particulate matter. Finally, fuel switching has the potential to reduce costs 

associated with the transportation, storage, and handling of coal and related waste 

streams. In addition, coal storage, handling, and related air pollution abatement 

require the use of electricity, a major source of carbon dioxide, nitrogen oxide, and 

mercury. As a result, increasing the plant’s reliance on natural gas may also yield 

reductions in such emissions from the power plant and the electricity generating 

units that provide the plant with electricity.

The Ability of U.S. Electricity-Generating Units to Switch from Coal to 

Natural Gas Is Limited, and Fuel Switching Could Cause Adverse Economic

Consequences 

Relatively High Natural Gas Prices Limit the

ricity

ared to coal, as illustrated in figure 2. 

 

According to industry stakeholders, switching from coal to natural gas for elect

generation is generally not economically feasible due to the relatively high price of 

natural gas comp

9

GAO, Legislative Branch: Energy Audits Are Key to Strategy for Reducing Greenhouse Gas 

Emissions, GAO-07-516 (Washington, D.C.: Apr. 25, 2007). 

Page 11 GAO-08-601R Implications of Switching from Coal to Natural Gas 
Figure 2: Average Cost of Fuels for the Electric Power Industry, 1995 

through 2006

Note: Average cost is not adjusted for inflation.

Currently, natural gas costs about four times more than coal per British thermal unit. 

Due to its higher cost, substituting natural gas for coal would increase operating

costs for electricity-generating units. Natural gas fuels about 20 percent of electricity 

production in the United States and, according to one stakeholder, accounts for 55 

percent of the electric utility industry’s entire fuel expense ($50 billion out of $91 

billion). In addition, natural gas has shown a higher rate of price increases over time 

relative to coal, according to EIA, and as illustrated in figure 3, natural gas prices 

ave been volatile in recent years. The market for natural gas has been susceptible to 

age.

h

extreme price swings when unexpected changes occur in the market, such as 

weather-related spikes in demand or supply constraints caused by hurricane dam

Page 12 GAO-08-601R Implications of Switching from Coal to Natural Gas
Figure 3: Natural Gas and Coal Costs at U.S. Electric-Generating Plants, 

2001 through 2007

Constrained Natural Gas Supply Limits Fuel Switching from Coal

In addition to the relatively high price of natural gas, the ability of coal-fired, 

electricity-generating units to switch fuels is constrained by the available supply of 

natural gas. According to industry stakeholders, the United States already faces 

serious supply problems without a potential increase in demand due to fuel 

switching. According to industry stakeholders and available EIA data, U.S. natural 

gas production peaked in 1973, and the average productivity of natural gas wells in 

hing output of older

ells and lower yields and higher depletion rates from more recent discoveries. EIA 

es over

lling

keholder

of

,

uld 

helming demand. Industry stakeholders said it is not possible to 

the United States has declined for the past 35 years due to diminis

w

projects that natural gas production will not increase in the lower 48 U.S. stat

the next 20 years. According to industry stakeholders, the United States has already

found and used its easily recoverable natural gas and finding new gas requires dri

deeper and in more inaccessible locations, raising production costs. One sta

said that it is increasingly difficult to keep output constant because about one-third

U.S. natural gas production has to be replaced every year. Thus, the United States 

has limited capability to meet growing demand for natural gas with domestic 

production. 

Consequently, widespread fuel switching at electricity-generating units would 

increase demand for natural gas beyond the capabilities of existing and projected 

supply. Stakeholders noted that the United States would require nearly twice as 

much natural gas supply by 2030, as currently projected by EIA, if the United States 

were to replace all coal-fired plants with natural gas. According to one stakeholder

replacing even one-half of coal-fired generation after 2015 with natural gas wo

lead to an overw

Page 13 GAO-08-601R Implications of Switching from Coal to Natural Gas 
increase supplies by this magnitude, especially in light of a trend toward increa

global demand and consumption. 

Because of limited domestic supplies, meeting additional demand would require 

imports from Canada, pipelines from Alaska, or liquefied natural gas (LNG) from 

overseas suppliers.

sed

a,

is as a significant problem facing the U.S. natural 

as market, according to one stakeholder. In addition, prospects for an Alaskan 

U.S.

utlook

LNG

er estimated that LNG supplies would be insufficient for the United States 

o fully switch from coal to natural gas unless the United States captured at least 90 

 

10 According to one stakeholder, imports, primarily from Canad

have steadily grown to comprise about 10 to 15 percent of U.S. supply. However, 

Canadian exports are declining as a result of decreased drilling and increased 

domestic demand. EIA identifies th

g

pipeline and other pipelines are unclear, creating further supply concerns for the

market. 

With widespread fuel switching, the United States would be more dependent on 

imported LNG, according to industry stakeholders. The EIA’s Annual Energy O

2007 projected major increases in LNG imports into the United States. According to 

one stakeholder, all of the natural gas required by large-scale fuel switching with

by 2015 would require more than 50 percent of the global supply. Another 

stakehold

t

percent of the world LNG market, which seems highly unlikely because of the 

significant projected growth in natural gas demand in the rest of the world. 

10EIA defines LNG as natural gas (primarily methane) that has been liquefied by reducing its 

temperature to -260 degrees Fahrenheit at atmospheric pressure. LNG and other liquefied petroleum

gases are liquefied through pressurization for convenience of transportation. 

Page 14 GAO-08-601R Implications of Switching from Coal to Natural Gas
Fuel Switching for Electricity-Generating Units Would Require Investment in New 

and Existing Infrastructure

Switching from coal to natural gas would require investment in new infrastructure 

and changes to existing infrastructure, including pipeline and storage capacity and 

generation technologies employed at existing coal plants. In theory, all coal units can 

be physically switched from coal to natural gas, but stakeholders said this practice 

would not occur broadly due, in part, to inadequate existing distribution networks 

and storage capacity, including pipelines. 

According to stakeholders, burning natural gas at an existing coal plant would require 

a pipeline with the ability to meet the plant’s fuel supply requirements. If not, a new 

gas pipeline would have to be sited, permitted, designed, and constructed. Almost all 

coal-fired boilers use some natural gas to ignite and regulate combustion, but they 

require relatively small amounts of natural gas with correspondingly small supply 

pipelines. Thus, existing coal-fired units would have to enhance their supply 

pipelines to switch to natural gas. As a result, according to stakeholders, a major 

fuel-switching program would require a nationwide natural gas infrastructure 

construction program. This would require expansion of interstate and intrastate 

pipelines to transport increased volumes of natural gas. Furthermore, existing plants 

and local natural gas distribution systems would have to increase their storage 

capacity. Local storage can help buffer variations in demand, and addressing local 

storage requirements could pose challenges, according to stakeholders. Increased 

reliance on natural gas would also require other new infrastructure, such as LNG 

terminals. 

Even with sufficient supply and storage capacity, stakeholders said that it would be 

more feasible and cost-effective to construct new natural gas units or dispatch excess 

capacity at existing natural gas units instead of fuel switching. Converting a coalburning plant to natural gas would involve significant capital costs and result in a less 

efficient plant with higher operating costs. At a minimum, an existing boiler designed 

for coal would need a new combustion system and a new heating surface to account 

for the differences between coal and gas combustion, according to stakeholders. 

Because a gas-fired steam generator is designed differently from a coal-fired boiler, 

burning natural gas in a coal-fired boiler would result in a loss of efficiency, which 

could decrease the amount of electricity produced by the unit. According to one 

stakeholder, a decrease in capacity of 10 to 12 percent is a reasonable estimate. As a 

result, certain stakeholders said that it would be more economically efficient in terms 

of capital and fuel costs to tear down an existing coal unit and build a new natural gas 

unit instead of retrofitting an existing coal unit to burn natural gas. In addition, 

industry stakeholders said that some coal-fired units cannot switch fuels because 

natural gas is not available, existing technology cannot be modified, or the system 

reserve is so low in the area that shutting down the coal plant for conversion to 

natural gas would result in brownouts or blackouts. One stakeholder stated that 

modifying a coal unit to burn natural gas would take the unit out of service for 4 to 6 

months. 

Page 15 GAO-08-601R Implications of Switching from Coal to Natural Gas 
In the few instances in which the industry has switched from coal to gas, existing 

plants have not been retrofitted to burn gas; instead, existing gas-fired units have 

displaced generation from marginally cost-effective coal-fired units rather than 

retrofitting existing plants to burn gas. Industry stakeholders said that many naturalgas-fired power plants were constructed in the late 1990s and early 2000s, leading to a 

large amount of underutilized capacity at plants constructed during this boom. 

According to one stakeholder, it is likely that, instead of fuel switching at coal plants, 

utilities would dispatch these underutilized natural gas units and run coal units less 

aggressively. EIA data describing the average capacity factors of different generation 

options demonstrate that significant excess capacity exists at natural-gas-fired plants. 

Capacity factor, in general terms, measures how intensely and frequently a generating 

unit is run.11 According to EIA, the average capacity factor for natural gas units is 

much lower than capacity factors for other generation options, such as nuclear and 

coal. As illustrated in figure 4, nuclear and coal-fired generation have the highest 

average capacity factors for 2006 at 89.6 percent and 72.6 percent, respectively. As a 

result, coal and nuclear capacity serve base load energy requirements.12 In 2006, 

average capacity factors for natural gas units ranged from 38.5 to 10.7 percent, 

depending upon the specific type of natural gas unit. Accordingly, there is potential 

to increase the utilization of existing natural gas units. Furthermore, the fact that 

there is excess capacity at existing natural gas units demonstrates the economic and 

other barriers to using natural gas for electricity production. 

 11The EIA definition of capacity factor is “the ratio of the electrical energy produced by a generating

unit for the period of time considered to be the electrical energy that could have been produced at

continuous full power operation during the same period.” 

12EIA defines base load capacity as the generating equipment normally operated to serve loads on an 

around-the-clock basis. According to EIA, a base load plant usually houses high-efficiency, steamelectric units, which are normally operated to take all or part of the minimum load of a system, and 

which consequently produce electricity at an essentially constant rate and run continuously. These 

units are operated to maximize system mechanical and thermal efficiency and minimize system 

operating costs. 

Page 16 GAO-08-601R Implications of Switching from Coal to Natural Gas
Figure 4: Average Capacity Factor by Energy Source, 2006 

In the event that the owners or operators of a plant decided to switch from coal to 

natural gas, changes to infrastructure, including pipelines and individual electricitygenerating units, would require regulatory approval, which can be costly and timeconsuming to obtain. Certain stakeholders said that it may take years to complete all 

of the mandatory permitting requirements before constructing pipelines. One 

stakeholder had significant reservations about whether the industry could obtain the 

required permits and rights-of-way for such an undertaking. However, this 

stakeholder also said that the natural gas industry may acquire rights-of-way by 

eminent domain rights, which could help address pipeline-siting and construction 

challenges. Stakeholders also identified air quality issues as a concern in retrofitting 

a coal plant to burn natural gas. Modifying the equipment at an existing coal plant 

could trigger permitting requirements and necessitate the purchase of additional air 

pollution control technologies. Several stakeholders said that modifying air permits 

would not be difficult, but that it would take time for the regulatory agencies to

review the applications and issue revised permits. 

Fuel Costs and Electricity Prices Could Increase As a Result of Fuel Switching, 

among Other Adverse Economic Consequences

Fuel switching and related pressure on available natural gas supplies could increase 

the price of natural gas, increasing energy costs for residential, commercial, and 

industrial consumers for both natural gas and electricity. Because energy costs 

Page 17 GAO-08-601R Implications of Switching from Coal to Natural Gas 
account for a relatively large share of overall costs or because they are heavily 

dependent on natural gas, for some residential and industrial consumers, any price 

increases can present significant difficulties. According to industry stakeholders, 

higher natural gas prices would affect millions of residential consumers who cook 

and heat their homes and water with natural gas. In 2006, we reported that the effect 

of higher wholesale natural gas prices on consumers depends largely on the degree to 

which the consumers or their suppliers may have purchased gas on the spot market—

which reflects current wholesale prices—or may have taken steps to reduce their 

exposure to these prices.13 The effect of higher prices also depends on the 

consumer’s sensitivity to price changes. Some consumers, such as low-income 

residents and certain high-energy intensive industries, are more sensitive to price 

changes than others and appear likely to experience the greatest impact. 

As we reported in 2006, high natural gas prices adversely affected industrial 

consumers. In particular, industries that rely on natural gas, such as chemical and 

fertilizer manufacturers, could face increased fuel costs. Other affected industries 

could include iron, steel, automobile manufacturing, glass, aluminum, plastics, paper 

and machinery, according to industry stakeholders. High fuel costs could make these 

industries less competitive internationally, according to stakeholders. Recent high 

natural gas prices forced some industrial consumers to shut down production 

facilities, and further cutbacks could occur if prices are high in the future. 

According to industry stakeholders, increases in the price of natural gas could also 

lead to electricity price increases. In the late 1990s and early 2000s, the combination 

of low gas prices and the fact that natural gas produces less air pollution than coal 

led to the construction of many new natural gas plants. However, these plants are 

currently underutilized because gas prices have risen substantially in recent years. 

Requirements to utilize these plants instead of coal plants could lead to higher 

electricity costs for consumers because some producers would be able to pass on 

their increased operating costs to consumers. 

Potential Benefits of Fuel Switching Include Reductions in Emissions and in Some 

Operation and Maintenance Costs, and Improvements in Local Environmental 

Benefits

Switching from coal to natural gas could decrease airborne emissions of carbon 

dioxide and air pollutants that cause adverse health effects, including nitrous oxide, 

sulfur dioxide, and particulates. Natural gas is the cleanest fossil fuel to burn in 

terms of air quality and carbon emissions, emitting up to 60 percent less carbon 

dioxide than coal when burned, according to industry stakeholders. However, 

stakeholders said that the magnitude of these benefits would depend on the source of 

the natural gas and other factors, such as plant efficiency. For example, one 

stakeholder said that increased reliance on LNG would result in smaller carbon 

dioxide emission reductions relative to coal than those through production and 

 13GAO, Natural Gas: Factors Affecting Prices and Potential Impacts on Consumers, GAO-06-420T 

(Washington, D.C.: Feb. 13, 2006). 

Page 18 GAO-08-601R Implications of Switching from Coal to Natural Gas
consumption of domestic natural gas because of the carbon dioxide emissions 

associated with the processing and transportation of imported LNG. In addition, 

utilities switching from coal to natural gas could gain public relations benefits from 

emission reductions, as well as a potential advantage associated with early action 

toward compliance with any future emissions reductions policies. 

Fuel switching from coal to natural gas could also decrease some operations and 

maintenance costs, in addition to lessening the physical impact on the surrounding 

environment. For example, fuel switching to natural gas would decrease the costs of 

storing coal on site and grinding it in preparation for combustion. In addition, 

according to one stakeholder, natural gas infrastructure has less of an impact on the 

surrounding environment because plants are modular and have smaller footprints 

than coal-burning facilities. Also, natural gas is delivered by pipelines, which are less 

visible than the infrastructure required for transporting and storing coal, particularly 

in urban areas, because they are often buried. 

 Conclusions 

Burning natural gas instead of coal at CPP and at electricity-generating units 

nationwide as part of efforts to reduce greenhouse gas emissions involves important 

tradeoffs related to economic, environmental, infrastructure, and fuel supply 

considerations. While CPP can adjust its fuel mix to burn more natural gas, doing so 

at existing electricity-generating units nationwide poses substantial challenges 

because of fuel supply constraints, infrastructure that would require modification, 

and economic considerations. 

With respect to fuel switching at CPP, AOC’s plans to purchase more natural gas than 

necessary under the Green the Capitol initiative raises questions about the efficient 

use of appropriated funds. Specifically, we estimated that fuel switching at the plant 

should cost between $1.0 and $1.8 million in 2008, well below the $2.75 million

budgeted for this purpose. Key uncertainties with our estimates include the future 

price of each fossil fuel burned at the plant and the lack of complete, reliable 

information on the overall efficiency of the plant or its seven boilers. Based on our 

estimates, substituting natural gas for a portion of the coal used at the plant would 

achieve reductions in carbon dioxide emissions at a cost of about $139 per ton of 

emissions. We believe that any decisions to exceed the level of fuel switching called 

for by the initiative should take into consideration the sense of the Congress with 

respect to achieving greenhouse gas reductions at the plant, as well as the economic 

and environmental tradeoffs associated with the use of each fuel. 

Recommendation for Executive Action 

We are recommending that, 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 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 

Page 19 GAO-08-601R Implications of Switching from Coal to Natural Gas 
plant, taking into account the efficiency of the plant’s boilers, related fuel supply 

systems, and pollution control equipment. 

Agency Comments and Our Evaluation 

We provided a draft copy of this report to the Acting Architect of the Capitol for 

review and comment. AOC provided comments via electronic mail. AOC officials 

said that they agreed with our cost estimate under the high fuel price scenario but 

that they were concerned about the potential level of resources that would be 

required to respond to our recommendation. We subsequently met with AOC officials 

who said that they were concerned that implementing our recommendation would 

require them to collect exact information on the efficiency of its boilers and fuel 

supply systems. Based on this discussion, we adjusted the wording of the 

recommendation to clarify that this was not our intent. AOC also provided a number 

of technical clarifications regarding the plant’s operation and their cost estimates for 

fuel switching, which we incorporated into our report as appropriate. 

We are sending copies of this report to the appropriate congressional committees. 

We are also sending this report to the Architect of the Capitol and the Department of 

Energy. We will make copies available to others upon request. In addition, this 

report will be available at no cost on the GAO Web site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact Terrell Dorn 

at (202) 512-6923 or dornt@gao.gov or Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov. Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. GAO staff who made major 

contributions to this report are listed in enclosure II. 

Terrell Dorn, Director 

Physical Infrastructure Issues 

Frank Rusco, Director 

National Resources And Environment 

Enclosures 

Page 20 GAO-08-601R Implications of Switching from Coal to Natural Gas
Enclosure I: Scope and Methodology

To respond to the first objective, we reviewed two analyses prepared for the House of 

Representatives’ Chief Administrative Officer (CAO), including an analysis prepared 

by the Architect of the Capitol (AOC) that served as the basis for the fuel-switching 

funding in the Capitol Power Plant’s (CPP) fiscal year 2008 appropriation, and a 

subsequent analysis prepared by the Department of Energy’s Lawrence Berkeley 

National Laboratory (LBNL). We then developed our own analysis based on data 

provided by AOC and U.S. Energy Information Administration (EIA). Part of our 

analysis was consistent with LBNL’s approach. The primary differences are that we 

extended LBNL’s analysis to future years based on projections of fuel use and prices. 

In conducting our analysis, we relied on fuel input data from AOC that had been 

provided to LBNL via AOC’s “Utilities Guru” database. In its analysis, LBNL had 

converted the fuel quantities from physical units to thermal units (expressed in 

millions of British thermal units). Next, we estimated the portion of steam produced 

by CPP that is used to heat House buildings. To do this, we divided the total square 

footage of House buildings by the total square footage served by the plant, based on 

data from the AOC’s 2006 Report to Congress.14 We excluded the Ford House Office 

Building from our analysis because its steam is supplied by General Services 

Administration, not CPP. The resulting calculation indicated that approximately 29 

percent of the plant’s steam output is attributable to the House of Representatives. 

Because the initiative recommends that CPP use natural gas to meet the energy needs 

of the House, we assumed that the House’s 29 percent of steam would be provided by 

natural gas only. We added to this an amount of natural gas equivalent to 71 percent 

of the total natural gas used had the fuel switching not occurred. This last step 

ensures that the amount of natural gas is “additional” to what would have occurred in 

a business-as-usual scenario. We based our business-as-usual scenario on the plant’s 

historical average of 43 percent natural gas, 47 percent coal, and 10 percent fuel oil 

over the period from 2001 through 2007. We left the amount of fuel oil used 

unchanged because the plant’s operations require the use of fuel oil as a back-up fuel. 

These calculations enabled us to approximate the level of natural gas required to 

meet the initiative’s directive in fiscal year 2008. 

 

To calculate the incremental cost of the new fuel mix in fiscal year 2008, we 

estimated the total cost of fuel under the Green the Capital scenario and subtracted 

our estimate of fuel cost under the business-as-usual scenario. For both scenarios, 

we multiplied the quantities of fuels needed by our estimates of the average cost of 

fuel per unit. We based our estimates of the average cost per unit for each fuel on 

fiscal year 2008 price projections from EIA. We escalated the EIA-projected prices by 

percentage “premiums” based on estimated relationships between average U.S. fuel 

 14The buildings used by the House of Representatives that were included in our analysis are: Cannon 

House Office Building, Longworth House Office Building, Rayburn House Office Building, East and 

West underground garages, and the House Page Dorm. Our analysis also includes 50 percent of the 

U.S. Capitol building and CPP. 

Page 21 GAO-08-601R Implications of Switching from Coal to Natural Gas 
prices in the industrial sector, as reported by EIA, and AOC’s annual average fuel 

costs per unit over the period from 2001 through 2007. 

We assumed that each boiler at the plant converts fuel into steam with equal 

efficiency based on a review of available data from an independent consultant to 

GAO and from Ross Associates, a consultant to AOC. We also requested information 

from AOC on the efficiency of its boilers on three occasions between November 2007 

and January 2008. In January 2008, AOC referred us to the Ross Associates analysis. 

In April 2008, AOC provided data on the combustion efficiency of its coal boilers and 

two of the four boilers that can burn oil or natural gas, which it collected during 

February 2008. Because AOC did not make us aware of this analysis or provide any 

results until after we had completed our work, time constraints precluded us from 

assessing its reliability or including it in our analysis. A review of the data suggests 

that it would not have made a material difference in our cost estimates. 

As part of our analysis, we projected the AOC’s per unit costs of natural gas, coal, and 

fuel oil for CPP for the period from 2008 through 2012. To estimate a baseline level of 

fuel consumption for the years 2008 through 2012, we started with the average fuel 

consumption by CPP during fiscal years 2001 through 2007. We then applied a 1 

percent decline in demand each year, beginning in 2008. The 1 percent estimate is 

based on two partially offsetting factors: 

• Additions to the Capitol Complex, including the Capitol Visitor Center, are 

expected to increase the plant’s steam demand by 1 percent each year through 

2025. This estimate was obtained from a 2004 report developed by an AOC 

consultant. 

• The Energy Policy Act of 2005 requires a 2 percent reduction in energy use per 

year for federal buildings. Because over one-quarter of House energy use is 

for heating, the act’s implementation may significantly reduce steam demand 

over time. 

Next, we estimated the incremental cost of the fuel mix under a Green the Capitol 

scenario over what the cost would be without a policy change, for each year between 

2008 through 2012. To do so, we used EIA-projected fuel prices for the industrial 

sector escalated with our estimated AOC cost premiums. These calculations 

produced a baseline cost scenario for each year, ranging from a high of $1.44 million 

in fiscal year 2009 to a low of $1.15 million in fiscal year 2012. 

We also conducted sensitivity analyses around our baseline estimates using a lowprice and a high-price scenario for fiscal years 2008 to 2012. EIA has not yet 

published new low- and high-price projections because of their recent revision of the 

Annual Energy Outlook 2008. To estimate low- and high-price projections, we 

adjusted the EIA projections of fuel prices for the industrial sector using measures of 

variability of these prices in the last few years. Specifically, we calculated the 

Page 22 GAO-08-601R Implications of Switching from Coal to Natural Gas
coefficient of variation15 of monthly prices of coal, natural gas, and distillate oil in the 

U.S. industrial sector over the period of December 2003 through November 2007.16

The coefficient of variation for the monthly prices for this period were: 18.2 percent 

for the price of natural gas, 6.5 percent for coal, and 17.2 percent for fuel oil. For thelow price scenario, we reduced EIA’s price projections for each of the three fuels by 

the corresponding percentage, while for the high-price scenario, we escalated the 

price projections by the same percentages. 

All of our cost estimates are in constant 2006 dollar values. In preparing our 

estimates, we consulted with AOC staff, officials representing the House CAO, and 

the Department of Energy (including LBNL and EIA). We also reviewed relevant 

studies prepared by these agencies. 

To respond to the second objective, we analyzed available data from the Department 

of Energy and other sources. We also obtained information from key stakeholders 

identified in discussions with the department that represent the electricity 

generation, natural gas, and coal industries using written interview questions. These 

key stakeholders included the American Gas Association (AGA), Edison Electric 

Institute (EEI), Electric Power Research Institute (EPRI), Interstate Natural Gas 

Association of America (INGAA), National Coal Council (NCC), National Mining 

Association (NMA), and Natural Gas Supply Association (NGSA). We conducted our 

work between October 2007 and April 2008 in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform 

the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and conclusions based 

on our audit objectives. 

 15The coefficient of variation is defined as the standard deviation divided by the mean. 

16At the time of writing, December 2007 was the last month for which prices of these fuels were

available from EIA. 

Page 23 GAO-08-601R Implications of Switching from Coal to Natural Gas 
Enclosure II: GAO Contacts and Staff Acknowledgments 

GAO Contacts 

Terrell Dorn, (202) 512-6923 or dornt@gao.gov

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

Staff Acknowledgments 

In addition to the contacts named above, Elizabeth Beardsley, Janice Ceperich, 

Tonnye Conner-White, Elizabeth R. Eisenstadt, Philip Farah, Mark Gaffigan, Michael 

Hix, Hannah Laufe, Jessica Lemke, Jon Ludwigson, Susan Michal-Smith, SaraAnn 

Moessbauer, Joseph Thompson, and Sara Vermillion made key contributions to this 

report. 

(545069) 

Page 24 GAO-08-601R Implications of Switching from Coal to Natural Gas
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