The 'hidden' costs of fossil fuels? $120 billion in US alone

Never mind what your electric bill or receipt at the pump says … using fossil fuels is even more expensive than you think, thanks to “hidden” costs like air pollution’s impact on human health.

Those costs amounted to about $120 billion for the US alone in 2005, according to a new report from the National Research Council (NRC). In fact, the hidden expenses is likely even greater, as that figure doesn’t include damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security.

The report examined those factors but did not assign a cost to them.

Requested by the US Congress, the NRC 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 petrol 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, the report says, a case can be made for government interventions — such as regulations, taxes or tradable permits — to address these external costs.

The report’s authors sought to calculate the costs associated with the damage of major air pollutants — sulfur dioxide, nitrogen oxides, ozone and particulate matter – on human health, grain crops and timber yields, buildings and recreation. When possible, they estimated both what the damages were in 2005 (the latest year for which data were available) and what they are likely to be in 2030, assuming current policies continue and new policies already slated for implementation are put in place.

The committee also separately derived a range of values for damages from climate change; the wide range of possibilities for these damages made it impossible to develop precise estimates of cost. However, all model results available to the authors indicate that climate-related damages caused by each tonne of CO2 emissions will be far worse in 2030 than now; even if the total amount of annual emissions remains steady, the damages caused by each tonne would increase by 50 to 80 per cent.

The report also found that the life-cycle damages of wind power, which now produces just over 1 per cent of US electricity but has large growth potential, are small compared with those from coal and natural gas. So are the damages associated with normal operation of the nation’s 104 nuclear reactors, which provide almost 20 per cent of the country’s electricity.

However, the life cycle of nuclear power does pose some risks; if uranium mining activities contaminate ground or surface water, for example, people could potentially be exposed to radon or other radionuclides; this risk is borne mostly by other nations, the report says, because the US mines only 5 per cent of the world’s uranium.

Life-cycle CO2 emissions from nuclear, wind, biomass and solar power all appear to be negligible when compared with fossil fuels, the report concluded.