The use of coal is suspected to have high environmental impact. Natural gas is treated as more environmentally friendly with high methane content and lower emission factors. In order to calculate the environmental impact in the whole life cycle associated with combustion of coal and natural gas all stages from “cradle to grave” should be taken into account. In particular, the transportation stage, especially in the case of life cycle analysis of gas, seems to be crucial. The distance of transmission of gas from gas fields, for instance located in Siberia, could be mainly associated with high diffuse emission of methane. The comparison of environmental impact assessment of coal and natural gas utilization for heating purposes is presented in the paper. The additional factor taken into account is localisation of boilers. In the analysis the coal is sombusted in combined heat and power plants equipped with flue gas treatment units is that released emissions are relatively remote from an urban area. In contrast, the natural gas is burned in small domestic installations with no additional FGT systems. The results of the analysis are given in 6 major impact categories. Moreover, the results of the life cycle analysis were brought into comprehensive thermo-ecological cost index, which is a cumulated exergy consumption of non-renewable resources. The results presented in the paper refer to the contemporary problem of the choice of energy sources in the context of its overall environmental efficiency.