•Real-world performance comparison between compressed natural gas and diesel buses.•Higher THC emissions for the compressed natural gas bus compared to the diesel bus.•Increase of 6–55% of fuel consumption with variations in the operating conditions.•Less NOx emissions for the natural gas bus at high congestion and road grade levels.•Vehicle specific power predicts CO2 and NOx emissions with good accuracy. This study investigated the effects of passenger load, road grade, and congestion level on the fuel consumption and emissions from a Euro VI compressed natural gas (CNG) urban bus and a Euro V diesel urban bus. Testing was performed under real-traffic conditions in Madrid, Spain, using a portable emission measurement system (PEMS). The PEMS data also were combined with the vehicle specific power (VSP) methodology to analyse the differences between the performance of the two types of buses and develop an energy-based emission model. Between the empty and 4000 kg passenger load cases, the fuel consumption and CO2 emissions for the diesel bus showed a significant increase by approximately 25%. With an increase in the road grade, and congestion level, the fuel consumption and CO2 emissions of both types of buses increased, by 6–55%. Unlike in the case of the diesel bus, the NOx emissions of the CNG bus decreased by 40–50% as the level of road grade and congestion increased. At intervals of VSP ≥ 2 kW/t, NOx emission rates for the CNG bus were approximately 60% lower than those of the diesel bus. Finally, the proposed VSP-based model estimated the fuel consumption and the CO2 and NOx emission factors with relative total errors of less than 13%.