Natural Gas vs Fuel Oil vs Steam: Carbon Cost Per Unit in a Building

Introduction

Two buildings can consume similar amounts of energy and still report very different greenhouse gas emissions. The difference often comes down to the energy source: natural gas, fuel oil, and purchased district steam do not receive the same carbon emissions factor under New York City's Local Law 97 (LL97).

For building owners, this distinction matters when comparing heating systems, evaluating retrofit options, and calculating annual emissions for compliance purposes. A building that switches from fuel oil to natural gas may reduce its calculated emissions per unit of energy consumed. A property that purchases district steam uses a different emissions coefficient again.

However, comparing fuels requires more than looking at a single number. Fuel prices, boiler efficiency, heating demand, and the way energy is delivered all affect the financial and operational outcome.

The starting point is to compare the carbon emissions assigned to the same amount of energy, then evaluate how efficiently each system delivers useful heat to the building.

For NYC property owners, the most relevant figures are the carbon coefficients prescribed by LL97 for the applicable reporting year. These regulatory values determine how different energy sources contribute to a covered building's reported emissions.

What Is a Carbon Emissions Factor?

A carbon emissions factor estimates the greenhouse gas emissions associated with a defined quantity of energy consumed.

In NYC's LL97 reporting framework, building emissions are calculated by multiplying the amount of energy consumed by the applicable emissions coefficient for that energy source.

The basic formula is:

Here, the coefficient is expressed in metric tonnes of carbon dioxide equivalent per kBtu. Carbon dioxide equivalent, or CO₂e, provides a common unit for expressing the climate impact of greenhouse gases.

For example, a building consuming natural gas receives a different emissions coefficient from a building consuming No. 2 fuel oil. Even when the energy consumption is identical, the calculated emissions will differ.

These are regulatory accounting factors for NYC compliance, not universal measures of every fuel's full lifecycle emissions. They should not be confused with fuel prices, utility bills, or a complete assessment of a heating system's efficiency.

Natural Gas vs Fuel Oil vs District Steam: Carbon Factors

For the 2024–2029 LL97 compliance period, the statutory coefficients for the most common on-site fuels and utility-supplied district steam are as follows.

Basis: NYC LL97 coefficients for calendar years 2024–2029. MMBtu means one million British thermal units. Figures are calculated conversions of the regulatory coefficients, not measured emissions for a specific building.

The comparison reveals three important points.

• Natural gas has a lower assigned emissions factor than either No. 2 or No. 4 fuel oil: On an equal energy-consumption basis, No. 2 fuel oil's factor is approximately 40% higher than natural gas's, while No. 4 fuel oil's is approximately 42% higher.
• No. 4 fuel oil has a slightly higher assigned factor than No. 2 fuel oil: The difference is small, but the distinction matters when reporting the fuel type accurately.
• District steam has a lower assigned factor than natural gas for this compliance period: That does not automatically mean a steam-heated building will have lower total emissions than a gas-heated building. The systems may consume different quantities of energy to deliver the same amount of heat, and actual outcomes depend on the building's characteristics and operating conditions.

These comparisons apply to the coefficients specified in the NYC code, not to every possible fuel mixture, steam network, or heating system.

What Does That Mean for a Building's Annual Carbon Emissions?

The per-unit figures become more useful when applied to annual consumption.

Consider a hypothetical commercial building that consumes the equivalent of 10,000 MMBtu of energy from one of the four sources during the reporting period. This is a simplified comparison in which each source supplies the same amount of purchased energy.

The calculation is straightforward. For natural gas:

Dividing by 1,000 converts kilograms to metric tonnes, producing 531.1 tonnes of CO₂e.

The other values use the same method with their respective coefficients.

This example illustrates why an energy source can materially affect a building's calculated emissions even when the amount of energy consumed is held constant. It does not predict the emissions of a real retrofit, because natural gas, fuel oil, and district steam systems may require different quantities of purchased energy to provide equivalent heating.

Natural Gas: Lower Emissions Than Fuel Oil, but Not Zero

Natural gas is commonly used in commercial boilers, domestic hot-water systems, and other building equipment.

Under the 2024–2029 LL97 coefficients, natural gas receives an emissions factor of 53.11 kg CO₂e per MMBtu. This is substantially below the factors assigned to No. 2 and No. 4 fuel oil.

For an owner operating an older oil-fired heating system, this difference can make fuel switching appear attractive from a compliance perspective. However, converting a boiler from oil to gas—or replacing it with new gas-fired equipment—requires more than comparing emissions factors.

The building team should evaluate the proposed equipment's efficiency, expected annual fuel consumption, equipment condition, infrastructure requirements, capital cost, and long-term decarbonization plans.

Natural gas also remains a fossil fuel. A lower regulatory coefficient than fuel oil does not mean that it is emissions-free or that a gas conversion is automatically the best long-term investment.

For NYC properties, the decision should be considered alongside the building's applicable energy and emissions requirements, expected future heating needs, and potential for efficient electric heating.

Fuel Oil: Why No. 2 and No. 4 Matter

Fuel oil is not a single category for LL97 reporting. The applicable coefficient depends on the specific fuel used.

No. 2 fuel oil has an assigned factor of 74.21 kg CO₂e per MMBtu, while No. 4 fuel oil has a factor of 75.29 kg CO₂e per MMBtu for the 2024–2029 reporting period.

An owner should therefore avoid reporting all heating oil under a generic category without verifying the fuel type and applicable reporting instructions.

The difference between the two oil grades is smaller than the difference between either oil grade and natural gas under these coefficients. Nevertheless, the correct classification is important for accurate emissions accounting.

For buildings that still rely on fuel oil, practical energy improvements may include reducing heating demand through air sealing and insulation, optimizing boiler controls, maintaining heat-transfer surfaces, improving distribution systems, and evaluating appropriate replacement options.

These measures can reduce the energy required to deliver heat, which may lower the building's total reported emissions even when the fuel source remains unchanged.

District Steam: How Purchased Heat Is Counted

Some NYC buildings purchase steam from a district energy network rather than generating all their heating energy through an on-site boiler.

In this arrangement, the building purchases thermal energy that is produced and distributed by an external supplier. Under LL97, utility-supplied district steam is assigned a separate emissions coefficient.

For the 2024–2029 period, the coefficient is 44.93 kg CO₂e per MMBtu. It is lower than the coefficients for natural gas and the two fuel-oil categories in the comparison above.

The important distinction is between purchased district steam and steam generated on-site.

A building that buys district steam should use the applicable district-steam reporting factor, subject to the relevant rules and any special circumstances. A building that generates steam using its own natural gas or fuel-oil boiler generally reports the fuel consumed by that equipment under the corresponding fuel coefficient rather than automatically using the district-steam factor.

Special rules can apply to campus-style energy systems and qualifying combined heat and power facilities, so those cases should be assessed separately.

Why the Compliance Period Matters

NYC's emissions coefficients are not necessarily identical for every compliance period. Building owners should use the values that apply to the reporting year rather than assume that a published factor remains unchanged indefinitely.

For the 2024–2029 period, the district-steam coefficient is 0.00004493 tCO₂e per kBtu.

Under NYC Rule § 103-14, the prescribed district-steam coefficient for 2030–2034 is 0.0000432 tCO₂e per kBtu, equivalent to 43.2 kg CO₂e per MMBtu. The listed natural-gas coefficient remains 53.11 kg per MMBtu, while the rule specifies the applicable No. 2 and No. 4 fuel-oil coefficients for that later period as well.

This change is one reason to check the reporting-year rules before preparing a building emissions report. A coefficient used for the wrong year can produce an inaccurate compliance calculation even when the underlying utility consumption is correct.

How to Compare Heating Systems Fairly

The emissions factor is only one part of the decision. A useful comparison must account for how efficiently a system turns purchased energy into useful heat.

Suppose a gas boiler and a district-steam connection both serve buildings with the same heating demand. The gas boiler may lose some of its input energy through combustion and distribution losses. The steam-heated building may have different losses in heat exchangers and its internal distribution system.

If the two buildings consume different amounts of purchased energy, applying the per-unit coefficients alone does not provide a complete answer about which system generates less total emissions for the same heating service.

A more useful evaluation follows four steps:

This process helps the owner distinguish a reduction in energy consumption from a change in the accounting factor or energy source.

Does a Lower Carbon Factor Mean a Lower LL97 Penalty?

Not necessarily. The carbon coefficient determines how much reported emissions are attributed to a given quantity of energy. The building's total calculated emissions must then be compared with its applicable annual emissions limit.

A building that consumes large quantities of a relatively lower-factor fuel can still exceed its limit. Similarly, reducing energy use or changing a fuel source may help bring emissions below the limit, but the result depends on the property's occupancy classification, floor area, energy use, and applicable compliance rules.

The emissions coefficient is therefore not a direct monetary price per unit of gas, oil, or steam. It is an input into the building's emissions calculation. Any LL97 penalty exposure depends on the applicable law, emissions limits, and the amount by which a covered building exceeds those limits.

Before making a major capital decision, owners should evaluate whole-building emissions under the proper rules rather than relying only on the per-unit ranking of fuels.

Conclusion

Natural gas, fuel oil, and district steam receive different emissions coefficients under NYC's Local Law 97. For the 2024–2029 compliance period, the assigned factors per MMBtu are 53.11 kg CO₂e for natural gas, 74.21 kg for No. 2 fuel oil, 75.29 kg for No. 4 fuel oil, and 44.93 kg for utility-supplied district steam.

These values are useful for emissions reporting and preliminary comparisons, but they should not be mistaken for a complete evaluation of heating systems. Actual building emissions depend on the quantity of energy consumed, while the financial outcome also depends on fuel prices, equipment efficiency, capital costs, and operating requirements.

For NYC building owners, the best next step is to verify the energy source and reporting period, apply the correct coefficient, and calculate total annual emissions from actual consumption data. When evaluating a retrofit, compare the systems on the basis of the useful heat they deliver, not just the carbon factor attached to each unit of energy.

That approach supports more accurate LL97 reporting and more defensible decisions about boiler upgrades, fuel switching, and long-term building decarbonization.

Frequently Asked Questions