Tuesday, October 20, 2009

Internalize the Externalities!

The cost of driving your gas car and powering your house just got quantified a little better.

And you thought it was just those numbers on the Chevron sign:~)

Whenever I give talks about EVs and renewable energy, I invariably get asked about the price of both. My solar customers ask how long it takes to pay off the photovoltaic system, and those I encourage to buy the coming EVs ask how much they'll cost compared to similar gas burners. These are legitimate questions, of course, but I'm always left with having to explain that the "price" of these things does not reflect the "cost".

"Internalize the Externalities"

That should be a bumper sticker that all enviros use to get across the idea that dirty fuels are not priced according to their true costs. This NY Times article discusses a Congress-authorized study by the National Academy of Sciences that took into consideration some, but not all, of the external costs of fossil fuels.

It turns out that the burning of the two worst fuels, coal and oil, accounts for about $120 billion each year in health costs. The study was very conservative in detailing the costs. They left out any costs attributable to climate change as "too uncertain to estimate" for instance.

"Nor did the study measure damage from burning oil for trains, ships and planes. And it did not include the environmental damage from coal mining or the pollution of rivers with chemicals that were filtered from coal plant smokestacks to keep the air clean."

"“The largest portion of this is excess mortality — increased human deaths as a result of criteria air pollutants emitted by power plants and vehicles,” said Jared L. Cohon, president of Carnegie Mellon University in Pittsburgh, who led the study committee."

The number of deaths is about 20,000 - EACH YEAR!

How many died on 9/11? What was our response to those deaths?

Specific costs for coal varied depending on whether it was a newer coal plant with modern pollution controls or an older pollution-belching behemoth. The newer plants were assigned 3.2 cents per kilowatt hour (kWh). The older coal plants were assigned 12 cents/kWh, more than the 10.4 cent national average retail price for a kWh! Keep in mind that these costs would be added to the cost of a kWh that you are currently paying. Consult your utility bill to see how many kWh you use each month and do the math.

Oh, how I would love to bid solar systems against those costs!

As for gasoline, the costs range from 23 to 38 cents/gallon. The study also left out the costs of using the military to protect oil imports. One could assume that at least some of the costs associated with the war in Iraq should be attributed to the use of oil. And there's lots more military involvement associated with oil than just that war.

So, as the fight in the Senate over the energy bill heats up, let's all keep this study in mind and use it to refute those who claim there is no justification for putting a price on pollution. When they make the claim, ask them how much the lives of their children are worth. Make them answer the question.



  1. Great post! Very informative and I like the approach you outlined.

  2. If you ever need more research to prove it, the National Research Council found that pollution caused $120 billion worth of damage to human health, agriculture and recreation in that year alone.

    It is HIGH time to correct our heading.

    The Electricnick.com team with the Electric Car Examiner.com

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