The true cost of electricity

I just came across an article and a study that I’d like to bring to your attention. The article, in Forbes magazine, references a study by two employees of the San Francisco EPA office.

The authors sourced a wide range of studies on the health impacts of emissions from fossil-fueled power plants. The particular twist of this report is that they calculated back to a price per kilowatt hour for the actual costs of increased health care, premature mortality, and lost work days.

What they found is staggering, really. On average, the health costs of power plant emissions add 14 to 35 cents to the cost of a kilowatt hour. This varies from state to state and fuel to fuel.

“Rizk and Machol found that the dollar value of improved human health from avoided emissions from fossil fuel-fired power plants ranges from a low of a half penny to 1.3 cents per kilowatt-hour in California to a high of 41 cents to $1.01 per kilowatt-hour in Maryland. (When accounting for imported fossil fuel electricity, California’s figures increase to 3 cents to 7 cents per kilowatt-hour – illustrating the importance of the City of Los Angeles’ recent decision to divest from coal-fired electricity.)

Rizk and Machol found a similarly wide range for the valuations for health impacts by fuel type: 19 to 45 cents per kilowatt-hour for coal, 8 to 19 cents per kilowatt-hour for oil, and 1 to 2 cents per kilowatt-hour for natural gas.” (From the Forbes article)

We are actually paying more in health costs for our electricity than we are paying on our monthly bills. In some cases as much as ten times more. (The average cost of electricity in the U.S. is around 10 cents per kilowatt-hour.) Overall they estimate that this costs us $361.7 to $886.5 billion annually, up to 6% of GDP.  As the authors point out, this analysis only takes into account the direct airborne emissions from the power plants. The health costs of air and water pollution from drilling, mining, fuel transportation, and refining aren’t in there. The real health costs from mine/well to wall socket have to be more.

It certainly puts the cost of solar, wind, and hydroelectric power in perspective. Given the cost of health care, solar and wind are absolutely competitive, even without any government incentives or tax breaks. It gives us one more piece of evidence in the case for 1) energy conservation, and 2) a rapid conversion to renewable energy.

Of course, the energy industry has always passed off externalities on the general public. It is the great underwater tax on us all. This study exposes just one more facet of those hidden costs. We should also remember that behind those cents per kilowatt hour is a huge amount of human misery – cancer, heart disease, emphysema, and asthma.

As I’ve written before, one of our great and strange advantages in this sphere is our waste. We in the U.S. waste so much energy that we could dramatically reduce our demand through efficiency without affecting our lifestyles. We can read by LED light just as well as we can read by incandescent. A well-insulated and sealed house “lives” the same as a leaky one, except that it is more comfortable and cheaper. An efficient refrigerator keeps the beer just as cold.

The tough part is fighting the fossil fuel industries. They want public policy that ignores these costs, or in reality passes them on to us.

Afterthought: While I’m piling on the fossil fuel industries (I am sure they are wincing in pain) I’d like to note the cost of maintaining CENTCOM, the Middle Eastern part of our worldwide military presence. We’re not there to protect the sand, nor is the Fifth Fleet swanning around the Persian Gulf just to protect random fishing boats. The U.S. spends about $220 billion a year protecting oil flow in the Persian Gulf. We import about 780 million barrels annually from the Persian Gulf. That’s military cost of $282 a barrel, almost three times the present retail price.