Natural Gas in the Residential Sector

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Highlights

• Of the 113 million primary residences in the United States in 2009, 99.5 percent of them had electricity access, while only 61 percent had natural gas access.
• The largest components of residential energy use in 2009 were space heating and water heating, which comprised 41 percent and 20 percent of total consumption.
• While natural gas appliances are often less site efficient than those powered by electricity, they are more efficient and better for the environment when considering the Full Fuel Cycle.
• Natural gas appliances can result in 60 percent fewer carbon dioxide emissions compared to electric appliances in some regions.
• Residential consumers often choose electric appliances over natural gas appliances even when they have access to natural gas.

Introduction

During 2009, energy was delivered to more than 113 million U.S. primary residences via four primary means: natural gas, electricity, fuel oil, and propane. Access and consumer preferences affect the types of energy used in U.S. homes and these have changed over the past decades. Natural gas and electricity remain dominant, however, the proportion of electricity use has grown rapidly compared to other sources (Figure 1).^[1]

The residential fuel mix heavily influences greenhouse gas emissions from this sector. Natural gas, liquified petroleum gas (mostly propane), and fuel oil, consumed on site, have relatively low greenhouse house gas emissions compared with the average GHG emissions associated with centrally generated electricity. In 2011, more than 40 percent of U.S. electricity production came from coal-fired power plants that create more carbon dioxide (CO₂) per unit of energy delivered, than natural gas, propane, and fuel oil used in the home.^[2] Coal-fired electricity also produces sulfur dioxide (SO₂), nitrogen oxides (NO_X), and mercury, which are pollutants associated with environmental damage and harmful health effects.

Energy Use in Residential Buildings

Figure 1: U.S. Residential Energy Consumption On-Site by Source 1980 and 2005

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Source: US EIA 2005

Figure 2: Average U.S. Home Energy Use 2005

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Source: US EIA 2005

There are strong regional variations in residential energy access and the type of energy used. A significant factor affecting the choice of energy used is the climate zone in which a home is located. Homes in colder climates tend to consume more energy. Nationally, more than 60 percent of residential energy is used for space heating and water heating, (41 percent and 20 percent respectively), while air conditioning (space cooling) consumes only 8 percent, (see Figure 2).^[3]

Higher space heating consumption results from the majority of U.S. residences being located in colder climate zones. The average amount of energy needed to heat a house during the winter, measured in Heating Degree Days^[4] (HDDs), is two to four times the average amount of energy needed to cool a house during the summer, measured in Cooling Degree Days (CDDs) (Figure 3).^[5] In the two coldest regions, zones 1 and 2, natural gas is the dominate space heating fuel, heating 24.8 million homes. In contrast, only 5.6 million homes utilized electric space heating (Figure 4).^[6]

Preferences appear to be different in warmer climates, where natural gas is less popular than electricity for space heating, with 12.3 million residences utilizing natural gas compared to 16.5 million utilizing electricity for their space heating needs.^[9] However, natural gas and electricity are equally popular for water heating, with an even split at 16 million homes each.^[10] In this case, more than 3 million homes had access to natural gas (as indicated by water heating usage) but did not use it for space heating.

Appliances, such as clothes dryers, ovens, and cooktops, are available in either natural gas or electric models. Notably, electric models account for the vast majority in all three (Figure 4). Nationwide, electric dryers outnumber gas models 4 to 1 (71.8 million compared to 17.5 million). For cooking appliances, whether ovens or cooktops, the ratio is almost 2 to 1 (68.1 million homes use electricity and 38.4 million use natural gas).^[11] Use of these appliances should be independent of climate zone variations as they operate within the heated and cooled space of homes. In any case, natural gas appliances are significantly underrepresented considering that 69.4 million homes have natural gas access.^[12]

Site Efficiency versus Full Fuel Cycle Efficiency

A home's energy consumption can be measured in terms of its fuel use: kilowatts of electricity, cubic feet of gas, or gallons of propane. “Site energy” is the total of all energy consumed at a residence as measured by the electric and natural gas meters as it enters the residence, and/or fuel oil or propane delivery. However, site energy does not tell the full residential energy story, as energy, whatever the source must be extracted and delivered to the point of use, incurring losses along the way that are not reflected in the readings on customers’ meters.

The process of generating electricity incurs substantial losses, enough that for every unit of electricity registered at the residential meter, it might have been necessary to generate about three times that amount of energy (from coal, natural gas, wind, etc.) at a central utility power plant. Centralized electricity generation and distribution through power lines is on average 32 percent efficient in the United States, with slight variations by region. The Western Electricity Coordinating Council which covers the western United States has the highest efficiency, at 37.8 percent, primarily due to a high percentage of hydropower. The Midwest Reliability Council region in the Upper Midwest has the lowest efficiency, 28.2 percent, due to a large percentage of older technology coal plants.^[13] The majority of losses occur at the power plant, especially at cooling towers that emit waste heat into the atmosphere in the form of steam. Approximately another 10 percent is lost during transmission over power lines, with longer lines yielding greater losses.

Figure 3: U.S. Climate Zones, Heating Degree Days vs. Cooling Degree Days

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Source: US EIA 2005

Likewise, the natural gas, fuel oil, or propane used by a residence must be extracted from the ground, processed or refined to remove impurities and other liquids and gases, and finally transported to the residence. All of these extraction, processing, and transportation steps require energy, but in total, direct use of natural gas in the home is roughly 92 percent efficient, approximately three times more efficient than centrally generated electricity.^[14] Accounting for all of the energy consumed in delivering a final energy source to the residence, is known as the “source energy” or “primary energy.”

To find the Full Fuel Cycle (FFC) efficiency of a residential appliance requires multiplying the “efficiency” of the source energy by the “efficiency” of the appliance. For example, the energy efficiency of the most efficient storage tank water heaters is 93 percent for electric, and 80 percent for natural gas.^[15] However, when their respective source energy is factored in, their FFC efficiencies are 30 percent for the electric model and 75 percent for the gas. The electric model water heater requires the use of significantly more primary energy than the natural gas appliance for the same level of output. Consequently, gas water heaters consume roughly half the source energy of the electric models and they happen to outnumber electric models in the United States.

This calculation is illustrative of the energy (and emissions) savings of natural gas appliances compared to electric. In practice, not all residential water heaters used in homes are natural gas or electric, nor are they all the most efficient on the market. Furthermore, the source energy efficiency level for electricity is a national average and in reality, the source energy efficiency level varies by region. Figure 5^[16] shows the source energy consumption for water heaters in each of the North American Electric Reliability Corporation (NERC) regions and the U.S. average. The variance in consumption ratio in each region is a combination of the different ratios between the two types of heaters and the difference in the source efficiency of the electrical power generation in each region. The green triangles represent the percent reduction in energy use between electric and natural gas in each case.

Emissions Comparison: Natural Gas vs. Electricity

In addition to the energy savings delivered by the higher FFC efficiency of the gas model, there is also a large greenhouse gas emissions difference. Figure 6 uses the same format as Figure 5 to show the difference in CO₂ emissions between electric and natural gas water heaters. Here the difference between total and percent CO₂ emissions is a combination of the higher FFC efficiency of the gas heaters and the varying CO₂ emissions of each region due to their different electricity generation portfolios. This is most clearly demonstrated by the slightly less than 30 percent reduction in CO₂ emissions in the Northeast Power Coordinating Council (NPCC) region in the northeast United States and Eastern Canada where a large percentage of the electricity comes from hydroelectric and nuclear power and the 40 percent reduction achieved in the WECC (the Pacific Northwest) where there is an abundance of hydropower.

This example only demonstrates the difference in CO₂ emissions between utility grid electricity and site use of natural gas. Similar analysis has been done for all utility power plant emissions. In the case of criteria pollutants, SO₂ and NO_X, there is even greater reduction, and with mercury, complete elimination. The difference in energy use and CO₂

Figure 4: Appliance Fuel Sources by Number of Units in U.S. Homes, 2009
[12]	[13]
[14]	[15]
Source: RECS 2009

emissions highlighted by the water heater example extends through all residential energy uses where gas is an alternative to utility grid electricity. The two main factors in determining the energy and emissions gains from appliance to appliance, are the difference in site efficiency between the gas and electric version and the source efficiency of the fuel or electricity used by the appliance.

In general, the site energy efficiencies of electric appliances run 5 to 20 percent higher than gas models. But when the source energy efficiency is factored in, natural gas models are at least twice as efficient. With the lower emission rate of natural gas, compared to the average electric utility mix, factored in with the greater FFC efficiency of gas, residential gas use is 40 to 65 percent lower in CO₂, 90 to 98 percent lower in SO₂, and 50 to 88 percent lower in NO_X, emissions and free of any mercury emissions.^[17]

Barriers to Increased Residential Natural Gas Access and Utilization

In 2009, 61 percent of U.S. residences made use of natural gas in some way. However, only 54 percent of new homes constructed in 2010 had natural gas service installed, and this access was primarily for heating.^[18] Additionally, as shown in Figure 7, annual consumption of natural gas in the residential sector has been declining since the 1990s; in spite of a growing residential customer base, total residential consumption has been declining since 1996. EIA analysis suggests that the cause of this decrease is a combination of historically high gas prices from 2000 to 2009, a general migration of Americans to warmer climate zones, and an increase in home construction standards and appliance efficiency.^[19]

The United States has, as a policy, pursued 100 percent residential access to electricity for decades. Through taxpayer-funded rural electrification programs, and ratepayer-funded electric utility grid extension programs, the United States has achieved greater than 99.5 percent residential access to public or private electricity.^[20] The same is not true for natural gas. When municipalities approve platting and development for new residential dwellings, electric utility access is almost universally required through developer or utility funding, or a combination of the two. Running natural gas lines in new developments is often viewed as an option and in many cases determined by financial analysis conducted by a private gas service company, or the local utility, if they also provide gas service. The future homeowner often has little participation in this decision process.

Figure 5: Water Heater Source Energy Consumption by NERC Region Source: Gas Technology, 2005

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Source: Gas Technology Institute 2009

Figure 6: Water Heater CO2 Emissions by NERC Region, 2005

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Source: Gas Technology Institute 2009

Figure 7: Residential Natural Gas Consumption

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Source: US EIA 2010

When natural gas infrastructure has been included in a new residential development, the homeowner still may have no influence, as the builder often decides, during architectural design and construction, which appliances will have gas lines run to them, thereby “locking in” the decision and limiting consumer choice. In cases where the homeowner enters the process prior to construction, they may be offered a choice of appliance fuel options, but choosing gas may come at a cost premium, for both the appliance, and the cost of running the gas lines. In this choice, between higher up-front costs of purchasing a home with gas appliances, versus a lower, long-term cost of operation (subject to gas prices), the immediacy of a slightly lower purchase price for electric appliances may prevail.

The trend of the last decade, towards a lower percentage of new homes using natural gas, will have a long-term effect. Even though it was likely influenced by temporarily high gas prices, it effectively “locks out” the option for these “all electric” homeowners to benefit from what may be several future decades of low gas prices.

Unlike utility electricity, gas service is not ubiquitous in the United States. In the aggregate, this has been the result of a large, regulated, public electric utility in competition with a predominately small and private residential gas industry. Price swings in electricity costs are buffered by a diversification in electric utility generation portfolios, are diluted as they are shared across a large ratepayer base, and are limited by public utility commissions. Conversely, most residential gas customers “go it alone”, and any increase, or decrease, in natural gas prices will be fully and immediately reflected in their next natural gas bill.

As described above, natural gas access, regulations, and price play important roles in residential fuel choice. Public education plays an important part, too. For nearly a century, industry and government have portrayed electricity as a clean and efficient fuel, and it is, at point of use.^[21] Perceptions of natural gas are similarly affected by public opinion and government policy that focus on the point of use. This point of use perception is reinforced by the way in which most people interact with electricity and natural gas in their everyday lives, flipping a switch or turning on a burner and paying a monthly bill. They rarely see or understand the generation side of electricity, the power plant, or the extraction and transportation of natural gas. The general public then has little basis for comparisons of the fuels on health, the environment, and the economy.

[1] Energy Information Administration, “Residential Energy Consumption Survey 2005, Table US3,” Available at http://www.eia.gov/consumption/residential/data/2005/c&e/summary/pdf/tab... [19]

2 Commission for Environmental Cooperation, “North American Power Plant Emissions,” 2004. Available at http://www.cec.org/Storage/56/4876_PowerPlant_AirEmission_en.pdf [20]

[3] Energy Information Administration, “Annual Energy Review 2009,” Available at http://www.eia.gov/consumption/residential/data/2009/#consumption-expend... [21]

[4] A degree-day compares the outdoor temperature to a standard of 65°F; the more extreme the temperature, the higher the degree-day number and the more energy needed for space heating or cooling. Hot days, which require the use of energy for cooling, are measured in cooling degree-days. On a day with a mean temperature of 80°F, for example, 15 cooling degree-days would be recorded. Cold days are measured in heating degree-days. For a day with a mean temperature of 40°F, 25 heating degree-days would be recorded. Two such cold days would result in a total of 50 heating degree-days for the two-day period. (Energy Information Administration, “What is a Degree Day?” http://www.eia.gov/energyexplained/index.cfm?page=about_degree_days [22])

[5] Energy Information Administration, “U.S. Climate Zones,” 2004. Available at http://www.eia.gov/emeu/recs/climate_zone.html [23]

[6] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC6.6, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[7] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC8.6, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[8] The total number of homes does not add up the same between the two examples because a significant number of homes in these two regions use fuel oil for space heating, while gas and electricity predominate in water heating.

[9] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC6.6, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[10] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC8.6, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[11] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC3.1, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[12] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC1.1, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[13] Source Energy and Emission Factors for Building Energy Consumption 2009, Tech. rep., Gas Technology Institute, Natural Gas Codes and Standards Research Consortium, American Gas Foundation, Washington DC (2009).

[14] Source Energy and Emission Factors for Building Energy Consumption 2009, Tech. rep., Gas Technology Institute, Natural Gas Codes and Standards Research Consortium, American Gas Foundation, Washington DC (2009). Available at: http://www.aga.org/SiteCollectionDocuments/KnowledgeCenter/OpsEng/CodesStandards/0008ENERGYEMISSIONFACTORSRESCONSUMPTION.pdf [25]

[15] Propane Council, “Energy, Environmental, and Economic Analysis of Residential Water Heating Systems,” 2010. Available at http://www.buildwithpropane.com/html/files/Water-Heating-3E-Analysis.pdf [26]

[16] Source Energy and Emission Factors for Building Energy Consumption 2009, Tech. rep., Gas Technology Institute, Natural Gas Codes and Standards Research Consortium, American Gas Foundation, Washington DC (2009).

[17] Source Energy and Emission Factors for Building Energy Consumption 2009, Tech. rep., Gas Technology Institute, Natural Gas Codes and Standards Research Consortium, American Gas Foundation, Washington DC (2009).

[18] Census Bureau, 2010 Census Data, U.S. Census Bureau, U.S. Department of Commerce (2010).

[19] Energy Information Administration, “Natural Gas Monthly,” 2010.

[20] Energy Information Administration, “Residential Energy Consumption Survey 2009,” Table HC1.1, Available at http://www.eia.gov/consumption/residential/data/2009/ [24]

[21] Since its inception, the EPA Energy Star program has cited the Site Efficiency of appliances as opposed to their FFC efficiencies. This may have led many consumers to choose electric appliance over gas models if they were not aware of the difference between Site Efficiency and FFC Efficiency.