Congressional Study: Energy Costs Hide $120 Billion in Damages to Health, Environment
A new report from the National Academy of Sciences finds that in 2005, sulfur dioxide, nitrogen oxides, and particulate matter emitted by 406 coal-fired power plants—representing some 95% of the nation’s coal-fired generation—caused about $62 billion in “hidden” costs, or damages not reflected in market prices of electricity.
The report from the academy’s National Research Council (NRC), “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use,”(PDF, summary) had been requested by Congress as part of 2005 energy legislation. The council had been asked to define and evaluate external expenses and benefits associated with production, distribution, and use of energy not already reflected in market prices.
“Because these effects are not reflected in energy prices, government, businesses and consumers may not realize the full impact of their choices,” the council said in a release on Monday. “When such market failures occur, a case can be made for government interventions—such as regulations, taxes or tradable permits—to address these external costs.”
The damages the committee was able to quantify were an estimated $120 billion in 2005, a number that reflects primarily health damages from air pollution associated with electricity generation and motor vehicle transportation. The figure did not include damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security, which the report examines but does not monetize.
Although the committee considered electricity produced from coal, natural gas, nuclear power, wind, solar energy, and biomass, it focused mainly on coal and natural gas—which together accounted for nearly 70% of the nation’s electricity in 2005—and on monetizing effects related to the air pollution from these sources. The report said that it was apparent from previous studies that a majority of the external effects were caused by electricity generation activities—as opposed to other activities in the electricity cycle such as mining and drilling.
Bulk “Damages” from Small Number of Coal Plants
The report said that although coal-fired electricity generation from the 406 sources resulted in large amounts of pollution overall, a plant-by-plant breakdown showed that the bulk of the damages were from a relatively small number of them. “In other words, specific comparisons showed that the source-and-effect landscape was more complicated than the averages would suggest,” it said.
The aggregate damages associated with emissions of SO2, NOx, and PM from coal-fired facilities in 2005 were approximately $62 billion, or $156 million on average per plant—or an average about 3.2 cents/kWh. By 2030, nonclimate damages were estimated to fall to 1.7 cents/kWh. After ranking all of the plants according to their damages, the council found that the 50% of plants with the lowest damages together produced 25% of the net generation of electricity but accounted for only 12% of the damages. On the other hand, the 10% of plants with the highest damages, which also produced 25% of net generation, accounted for 43% of the damages.
“Damages” from Natural Gas Much Lower Than from Coal
Burning natural gas generated far less damage than coal, both overall and per kilowatt-hour of electricity generated, the report found. A sample of 498 natural gas–fueled plants—accounting for 71% of gas-generated electricity in the U.S. in 2005—produced $740 million in total nonclimate damages, an average of 0.16 cents/kWh. As with coal, there was a vast difference among plants; half the plants accounted for only 4% of the total nonclimate damages from air pollution, while 10% produced 65% of the damages. By 2030, nonclimate damages are estimated to fall to 0.11 cents/kWh. Estimated climate damages from natural gas were half that of coal, ranging from 0.05 cents to 5 cents per kWh.
“Damages” from Nuclear Power Tagged to Life Cycle
The committee did not quantify damages associated with nuclear power because the analysis would have involved power plant risk modeling and spent-fuel transportation modeling that would have required far greater resources and time than were available. Even so, it concluded, from previous studies, that damages associated with normal operation of nuclear power plants (excluding the possibility of damages in the remote future from the disposal of spent fuel) were much lower than those associated with fossil fuel–based power plants.
However, the study said, the life cycle of nuclear power did pose some risks. If uranium mining activities contaminate ground or surface water, people could potentially be exposed to radon or other radionuclides through ingestion. “Because the U.S. mines only about 5% of the world’s uranium supply, such risks are mostly experienced in other countries,” it said.
Wind Power Creates Visual and Noise “Damages” Plus Harm to Birds and Bats
Because no fuel is involved in the production of wind power and neither gases nor other contaminants are released during the operation of a wind turbine, damages associated with the renewable energy source were small compared to coal and gas. The study said that wind power’s effects did, however, include potentially adverse visual and noise effects, and the killing of birds and bats. But, it added, “In most cases, wind-energy plants currently do not kill enough birds to cause population-level problems, except perhaps locally and mainly with respect to raptors.” The tallies of bats killed and the population consequences of those deaths have not been quantified but could be significant. “If the number of wind-energy facilities continues to grow as fast as it has recently, bat and perhaps bird deaths could become more significant,” it said.
Although the committee did not evaluate in detail the effects of solar and biomass generation of electricity, it said it had seen no evidence that they currently produce adverse effects comparable in aggregate to those of larger sources of electricity. “However, as technology improves and penetration into the U.S. energy market grows, the external costs of these sources will need to be reevaluated,” the report said.
Source: National Academy of Sciences