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Fuel Sources

The energy we use every day comes in many different forms from many different sources, but they can be categorized as two basic types: nonrenewable (those that cannot be replenished in a short length of time) and renewable (those that can be replenished in a short period of time).

Nonrenewable Fuels

Oil, natural gas, coal and uranium – the most common fuels in the world today – are considered to be nonrenewable, due to the eons it took to create them and mankind’s inability to synthesize similar fuels readily. All but uranium are called “fossil fuels” because of their genesis in decaying plant and animal matter. Together, oil, natural gas, coal and nuclear energy account for about 87 percent of the world’s energy supply, a share that has changed little over recent decades.18

Oil and natural gas built modern Texas, and the industry still remains a major contributor to the state’s economy. Its future is likely to be characterized by more expensive production methods, both on- and offshore; the increasing importance of unconventional methods of retrieving oil and gas resources; higher import volumes and prices; better conservation technology; and government policies designed to increase conservation.

Crude oil, which is refined to create gasoline and diesel fuel, remains the dominant source of transportation fuel in Texas and the U.S., accounting for nearly 97 percent of transportation energy. Natural gas, meanwhile, accounts for about half of all electricity generation in Texas. Liquefied petroleum gases (LPG), such as propane, can be used for heating, cooking and motor fuel and in Texas play a critical role as a feedstock to produce other products; chemical feedstock uses account for 90 percent of LPG consumption in Texas.

Coal is the next-largest source of electricity generation in Texas, and is the nation’s leading source of electricity. In 2005, coal was used to generate a little more than one-third of Texas’ electricity, but about half of the U.S. total. Demand for coal is increasing across the globe and some governments, including the U.S., are considering limitations on greenhouse gas emissions. Such factors could impact the development of new coal plants, at least until technology to capture carbon emissions becomes cost-effective.

Nuclear fuel derived from uranium is another source of electricity generation capacity. Though nuclear power only provides about 10 percent of Texas’ total electricity generation, rising prices of other fuel sources, along with revised federal regulation intended to encourage the development of nuclear power plants, mean that nuclear generation capacity in Texas is likely to grow.

Renewable Fuels

By definition, renewable energy is abundant and constantly replenished. It includes energy from the sun, earth (geothermal power), biomass and wind. While most renewable sources of energy are used to produce electricity, some biomass sources are well-suited, through appropriate technology, for conversion into transportation or boiler fuels.

Texas currently uses relatively little renewable energy, but it has an abundance of renewable energy resources, especially wind and solar power. Prior to the start of the 2009 legislative session, the State Energy Conservation Office (SECO), which is administered by the Texas Comptroller of Public Accounts, will issue a report to the legislature detailing renewable energy resources available to Texas.

Wind energy accounts for about three-quarters of all renewable electricity generated in Texas. Wood and hydropower, the next largest renewable fuel sources, accounted for about 11 percent and 8 percent, respecitively, of renewable electricity generated in the state in 2006.

In the arena of renewable transportation fuels, Texas has taken the lead in producing biodiesel, but is not as strong in ethanol production and consumption. Texas is the nation’s leading producer of biodiesel, with 22 plants capable of making more than 100 million gallons of the fuel each year.

Ethanol in the U.S. currently is produced from corn, although other materials can be used. At present, there are two ethanol production facilities operating in Texas, and two more facilities are under construction that are expected to begin operations in 2008. Ethanol can be blended with gasoline to fuel vehicles. E85 is 85 percent ethanol and 15 percent gasoline and can be used by special flexible fuel vehicles (FFVs), which are widely available in Texas. But E85 fueling stations are scarce; there are fewer than 30 public fueling stations in the state.

Exhibit 9

Fuel Sources
Non-Renewable Renewable
Crude Oil Solar
Natural Gas Wind
Liquefied Petroleum Gas (LPG) Ehtanol
Coal Biodiesel
Nuclear Energy Wood
Feedlot Waste
Landfill Gas
Municipal Solid Waste
Ocean Power

The following pages contain short summaries of each fuel source. These summaries are intended to provide a brief description of each fuel source and allow for comparisons of fuel sources across different categories. Each fuel source summary provides information on:

  • Cost;
  • Economic Impact in Texas;
  • Economic Viability in Texas;
  • Availability and Current Infrastructure in Texas;
  • Environment, Health, and Safety;
  • Fuel Characteristics; and
  • Other Issues.

These fuel source summaries are divided into two sections, the first covering non-renewable fuels and the second summarizing renewable fuels (Exhibit 9).

Note: the following summaries include data on costs per million Btu for each fuel source. This is the cost of the fuel as an input for direct heat use, to produce transportation fuel or for generating electricity. 2005 data are used because they are the most recent data available upon which comparisons across fuel sources can be made. For transportation fuels, per gallon costs are given based on January 2008 prices. In other instances, we have used the most recent data available and have noted the relevant year.

Also, in discussing the resource requirements of various energy sources, these summaries distinguish between water withdrawal and water consumption. Withdrawal refers to the amount of water extracted from surface or groundwater sources; consumption is the portion of those withdrawals that is actually used and thus no longer available in the area.

More information for each of these fuel sources and other topics covered in this Executive Summary can be found in the Energy Report, which is on the Web at

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