Coal-fired power plants currently account for about 80% of CO 2 emissions from the U.S. electric power industry and about 33% of all U.S. CO 2 emissions. Accordingly, reducing CO 2 emissions from coal plants is a focus of many proposals for cutting greenhouse gas emissions. Options include capturing and sequestering the CO 2 emitted by coal plants, and/or replacing coal-fired generation with low- and zero-carbon sources of electric power, such as wind or nuclear power. Another option is to replace coal power with increased use of natural gas generation. Natural gas is not a zero-carbon fuel, but gas-fired power using modern generating technology releases less than half of the CO 2 per megawatt-hour (MWh) as a coal plant. Recent large increases in estimates of natural gas reserves and resources, especially from shale formations, have further fed interest in natural gas as a relatively low carbon energy option. One proposal is that the nation can and should achieve near-term reductions in carbon emissions by making more use of existing natural gas plants. This argument was made at an October 2009 Senate Energy and Natural Resources Committee hearing on The Role of Natural Gas in Mitigating Climate Change . An executive for a large natural gas pipeline company stated that "Just as natural gas plays a key role in meeting U.S. energy demands, it can also play a key role in providing meaningful, immediate , and verifiable [CO 2 ] emission reductions." [emphasis added] The witness for Calpine, a large operator of gas-fired power plants, stated that: I am here today to tell you that we could, today, simply through the increased use of existing natural-gas fired power plants, meaningfully reduce the CO 2 emissions of the power sector, immediately and for the foreseeable future. In other words, a near- and medium-term solution to our climate change challenge is at hand . No guesswork. No huge spending programs needed. That power would be reliable—available all day, every day. And if we embrace this solution with the right incentives, American business would continue to invest its own capital in existing proven technologies to build even more natural gas fired plants to dramatically further reduce emissions for the longer term. [emphasis added] Both of these statements emphasize the claimed immediate carbon reductions that can result from increased use of natural gas. This would be accomplished by squeezing more electricity from existing gas-fired power plants, so that coal-fired plants can be operated less and CO 2 emissions quickly and substantially reduced. This report provides an overview of the issues involved in displacing coal-fired generation with electricity from existing natural gas plants. This is a complex subject and the report does not seek to provide definitive answers. The report aims to highlight the key issues that Congress may consider in deciding whether to rely on, and encourage, displacement of coal-fired electricity with power from existing natural gas plants. The balance of the report is organized as follows: Background on gas-fired generation and capacity. Coal displacement feasibility issues. Policy considerations. The report also includes two appendices. Appendix A , Background on the Electric Power System, may be of particular value to readers relatively new to the subject. Appendix B provides information on the gas-burning combined cycle generating technology discussed in the report. Several topics are beyond the scope of this report: What would be the cost of a policy of displacing coal with natural gas ? The cost would depend on a host of uncertain variables, such as future natural gas and coal prices, any need to build additional pipeline and transmission line facilities, and the cost of carbon (if any). Could natural gas be burned on a large scale in existing coal plants? Assessing this option would require engineering analysis of the plants and determining how many coal plants have access to high capacity natural gas pipelines. How will circumstances change over time? For example, while existing natural gas plants may have enough excess capacity today to displace a material amount of coal generation, this could change in the future as load grows. What kind of existing natural gas plants could be used to displace coal? This report focuses on the potential for displacing coal generation with increased use of underutilized "combined cycle" generating plants, the most modern and efficient type of natural gas-fired power plants. Two other types of gas-fired plants have low utilization rates: peaking plants (stand-alone combustion turbines and diesel generators) and old steam-electric natural gas plants. These are not reviewed in the report because they are relatively inefficient and may not be designed or permitted for baseload operation. Addressing these issues would require computer modeling and engineering analysis beyond the scope of this report. As noted in the concluding section of the report, these issues, if of interest to Congress, could be part of a more comprehensive review of the potential for displacing coal with natural gas. The argument for displacing coal with natural gas rests on the fact that the United States has a large base of advanced technology, underutilized, gas-burning power plants. This section of the report describes how this reservoir of underutilized natural gas combined cycle (NGCC) plants came about, and why it may represent an option for reducing the use of coal plants. From the 1990s into this century, gas-fired power plants have constituted the vast majority of new generating capacity built in the United States. This development is illustrated by Figure 1 for the period 1990 to 2007. Minimal new coal capacity was constructed and the growth in nuclear capacity was limited to uprates to existing plants. Only wind capacity has challenged the pre-eminence of natural gas as the source of new generating capacity, and then only in the latter part of the 2000s when total capacity additions declined sharply. As shown in Figure 2 , this building boom doubled the natural gas share of total generating capacity between 1989 and 2007. Natural gas-fired capacity is now the largest component of the national generating fleet. Although natural gas is the largest source of generating capacity, it trails far behind coal as a source of actual electricity generation. In 2008, coal accounted for 49% of all electricity produced, compared to 21% for natural gas, 20% for nuclear power, and 6% for hydroelectric generation. The remainder of this section will explain why so much new gas-fired generation was built and why it is underutilized. Natural gas was the major source of new capacity in the 1990s and early 2000s in part by default. Nuclear and coal power have been burdened with cost, environmental, and (in the case of nuclear power) safety concerns. Oil-fired generation was essentially ruled out by the costs and supply risks of petroleum supplies. This left natural gas as the energy source for new non-renewable power plants. But in addition to the negatives that surrounded alternatives, gas fired capacity also grew because of favorable technological, cost, environmental, and power market characteristics. The new gas-fired plants constructed in the 1990s and subsequently were built around the latest design of combustion turbines—a specialized form of the same kind of technology used in a jet engine, but mounted on the ground and used to rotate a generator. Stand-alone combustion turbines were built to serve as peaking units that would operate only a few hundred hours a year. However, the most important technological development was the application of combustion turbines in modern natural gas combined cycle power plants. (For additional information see Appendix B .) These plants were often intended to serve as baseload generators which would operate 70% or more of the time. The NGCC has three important characteristics: The technology is very efficient , because it makes maximum use of the energy in the fuel through a two-step generating process that captures waste heat that would otherwise be lost. NGCC plants can be built r elatively quickly and cheaply . An NGCC plant costs roughly $1,200 per kilowatt of capacity, about half as much as for a coal-fired plant, and can be built in about two to three years from ground-breaking to operation. This compares to about to five to six years to build a coal plant. Coal plants also tend to have longer pre-construction planning and permitting phases. Combined cycle technology is suitable for relatively small scale and modular construction . NGCC plants can be economically built at unit sizes of about 100 MW, and larger projects can be constructed by adding units in a building block fashion over time. Coal plants in contrast are generally economical only at a unit size of several hundred megawatts. For the reasons discussed below, these characteristics made the NGCC an attractive technology option for the independent power producers that dominated the construction of new power plants in the 1990s and after. The construction of new gas-fired capacity was also encouraged by relatively low natural gas prices in the 1990s. As illustrated by Figure 3 , the spot price for natural gas hovered around $2.00 to $3.00 per MMBtu (nominal dollars) through the decade, and a widely held expectation was that gas prices would remain low into the future. The operation of NGCC plants, and natural gas plants generally, produce fewer harmful environmental impacts than coal-fired plants, and have been much easier to site and permit than coal plants. NGCC technology has fewer air emissions than coal plants in part because of the nature of the fuel, and in part because of the greater efficiency of the technology. For example, natural gas when burned inherently emits about half as much carbon dioxide as coal. However, because combined cycle plants are more efficient than typical existing coal plants in converting fuel into electricity, the difference in emissions is greater when measured in terms of CO 2 released per megawatt-hour of electricity produced. By this measure a modern combined cycle emits only about 40% of the CO 2 per MWh as a typical existing coal plant.