A new report from the National Research Council on the “hidden costs of energy” is, frankly, stunning. In a sane world, it would be headline news.
Producing and using energy imposes all sorts of costs on public health, crop yields, ecosystems, recreation, educational performance … the list goes on. Many of these costs don’t end up reflected in the market price of energy; consumers don’t see them or factor them into purchasing decisions. They are hidden, paid indirectly through, for example, health-care spending or environmental-remediation costs. Such costs are external to energy markets — externalities, as economists call them — and they represent an enormous subsidy to the dirtiest sources of energy.
I’m always left somewhat dissatisfied by discussions about externalities. People seem to imagine them as external in some sort of metaphysical way, as though the costs inhabit an immaterial and weightless ether. (“Social” costs, they’re sometimes called.) But costs are costs. Someone pays them, with real money. They dampen economic productivity, like driving with one foot pressing the brake.
In 2005, Congress set about finding out just what these external costs of energy production and use amount to. It requested that the National Research Council (part of the National Academy of Sciences) attempt to place a number on them. On Monday, the NRC released its report: “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use.”
First, note that the report did not attempt to quantify the damage to ecosystems and agriculture wrought by climate change. It did not attempt to quantify the national security costs of securing energy supplies. It did not attempt to quantify the land-use costs of biofuels. It didn’t attempt to quantify the costs of mercury pollution, which as Bill Chameides documents, are substantial. It didn’t attempt to quantify the impact on taxpayers that subsidies to the coal industry impose.
So a huge chunk of costs were written out, meaning the results are extremely small-c conservative. Nonetheless, the NRC found that hidden costs amounted to $120 billion in 2005.
Of that $120 billion, a whopping $62 billion — over half — came from one source: coal-fired electricity plants. And that’s only a partial accounting, as Ken Ward Jr. reports:
Maureen L. Cropper, a panel member and professor of economics at the University of Maryland, noted that the study also did not examine “upstream” costs of coal-fired power — such as damage from mountaintop removal mining — or “harm to ecosystems” from other impacts, such as disposal of toxic power plant ash.
If MTR mining, ash disposal, mercury emissions, market-distorting subsidies, and climate damage were taken into account, how much farther do you think coal’s costs would rise, in both absolute and relative terms?
Remember this report the next time you hear that “coal is cheap.”