Last week, the nation suffered from major sticker shock when we learned that our use of fossil fuels comes with a hidden price tag of $120 billion per year. Thanks to the results of the National Research Council’s report on energy and the environment, some of the extra costs of dirty energy were exposed. (Full disclosure: Policy Integrity’s faculty director, Richard L. Revesz, sat on the report’s panel).
But folks should prepare for a second round of surprise costs because, as the authors of the report mention, there are more stickers that weren’t accounted for in this sum. David Roberts notes that the $120 billion does not include major costs like tax-payer subsidies for coal, mercury pollution, and a few other by-products of “cheap” energy.
Most notably, the report did not tally up the price of climate change or greenhouse gas emissions. Using a very conservative estimate from recent proposed federal greenhouse gas regulations, each ton of CO2 causes $19 in social harm — multiply that by the number of tons of CO2 emitted every year, and you get $117 billion per year.
This low-ball number nearly doubles the report’s estimate — the combined health and climate costs of heat trapping emissions comes to $237 billion per year. This amounts to a hidden tax of about $2,099 per household per year.
The NRC report underscored what many of us have known for some time-that the ostensibly “cheap” energy we get now from fossil fuels is actually extremely expensive. We disassociate the price that we pay for things like heating or electricity from the big hidden costs dirty energy imposes on our nation. In so doing, we obscure the real price tag of using fossil fuels.
Some of these true costs have been deferred, but they will catch up to us soon enough. Like a family living in a foreclosed house and just waiting for the sheriff to carry out the eviction order, we are living on borrowed time.
At $237 billion per year, the price of dirty energy is all the more reason to move forward with a cap on our greenhouse gas emissions. A recent Policy Integrity report found that, only looking at the greenhouse gas side of the equation, the Waxman-Markey would net $1.5 trillion, and possibly much more in savings and avoided costs.
Some policymakers worry that it will be too expensive for America to bring down our greenhouse gas emissions levels. But the problem is, we are already paying dearly for the way we produce energy. Over time, those costs will rise as the effects of climate change become increasingly felt. The question is, when will we decide that the hidden fossil fuel tax isn’t worth paying any more.