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National Academy Blockbuster: Coal’s Huge Hidden Costs

Report: Pollution from Burning Coal Costs $62 billion a year

by Ken Ward Jr.

Coal industry lobbyists and coal-state politicians like to remind us that coal is a relatively cheap source of energy.

But in a major new report out today, the National Academy of Sciences details some of the huge "hidden costs" of coal: More than $62 billion a year in "external damages" - that is, premature deaths from air pollution.

A National Academy news release is available here and the report itself here.

Those coal costs are part of the $120 billion in "hidden costs" that the academy's National Research Council documented in its report, "Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use."

What are they talking about? The press release explains:

Requested by Congress, the report assesses what economists call external effects caused by various energy sources over their entire life cycle - for example, not only the pollution generated when gasoline is used to run a car but also the pollution created by extracting and refining oil and transporting fuel to gas stations.  Because these effects are not reflected in energy prices, government, businesses and consumers may not realize the full impact of their choices.  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 report says. 

The study focused on trying to put a dollar amount of the health damages associated with the emissions of major air pollutants - sulfur dioxide, nitrogen oxides, ozone and particulate matter - from various aspects of the nation's energy production and use.

During a conference call with reporters, the study team chairman, Carnegie Mellon University President Jared L. Cohon, noted that in the electrical sector, coal provides nearly half of the nation's electricity - but accounted for nearly all of that sector's hidden costs.

In 2005, the total annual "external damages" from these air pollutant created by burning coal at 406 power plants were about $62 billion. That amounts to about 3.2 cents for every kilowatt-hour of energy produced. For comparison purposes, the average U.S. cost of electricity for consumers is 12 cents per kilowatt-hour.  The National Research Council report added:

... The differences among plants were wide - the 5th and 95th percentiles of the distribution were $8.7 million and $575 million, respectively. After ranking all of the plants according to their damages, we found that the 50 percent of plants with the lowest damages together produced 25 percent of the net generation of electricity but accounted for only 12 percent of the damages. On the other hand, the 10 percent of plants with the highest damages, which also produced 25 percent of net generation, accounted for 43 percent of the damages.

What about other fuels?

The report press release says:

Burning natural gas generated far less damage than coal, both overall and per kilowatt-hour of electricity generated.

And:

The life-cycle damages of wind power, which produces just over 1 percent of U.S. electricity but has large growth potential, are small compared with those from coal and natural gas.

It's important to note that the report found that coal's hidden costs should go down significantly, to about 1.7 cents per kilowatt hour, by 2030, in large part because of reductions in air pollution as plants add more emissions reductions equipment.

But, the study did not try to provide new estimates of the hidden costs related to coal's greenhouse gas emissions. Instead, it simply cited previous projections which put those costs at ranging between 01. cents to 10 cents per kilowatt-hour.

And as study team member Maureen L. Cropper of the University of Maryland pointed out, this new report did not attempt to examine all sorts of other "up-stream" impacts of coal, such as water pollution or damage from mountaintop removal coal-mining:

We didn't really quantify or monetize those anywhere. So, for example, if you take the waste from a scrubber and dump it in the Monongahela River, we didn't include that.

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