Hidden Costs of Energy Unpriced Consequences of Energy Production and Use (2010) / Chapter Skim
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1 Introduction
1 Introduction
Pages 22-63
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From page 22... ...
However, it was not the committee's task to estimate those benefits that are considered largely to be "internal" because they are reflected in energy prices or government policies. The purpose of this study was to define and evaluate external effects of energy production, use, and consumption, which refer to costs and benefits not taken into account in making decisions (such as the siting of a power plant)
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established the Committee on Health, Environmental, and Other External Costs and Benefits of Energy Production and Consumption (see Appendix A)
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In carrying out its task, the committee will include the following activities: S eek to build upon the results of the NRC initiative America's Energy Future: Technology, Opportunities, Risks, and Tradeoffs. I dentify key externalities to be assessed in the categories of human health, environment, security (including quality, abundance, and reliability of energy sources)
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From page 25... ...
dependence on oil imports and lowering greenhouse gas emissions, while ensuring that affordable energy will be available to sustain economic growth. The AEF's task was to critically review recently completed major studies on the potential for change in energy technology and use; compare the studies' assumptions; analyze the currency and quality of the information used; and assess the relative states of maturity of technologies for potential deployment in the next decade.
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From page 26... ...
Research in estimating the external costs of energy peaked in the earlyto-mid-1990s when public utility commissions in the United States were interested in tilting electric utility investment choices toward sources with lower negative externalities, such as renewable energy. This policy was to be done with an "adder" equal to the marginal damages associated with each type of electricity generation.
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From page 27... ...
The more notable differences between our committee's study and previous studies, particularly the major studies done in the early to mid-1990s, are in the different approaches to, and the extent to which, the studies addressed the following: a. Number of power plants -- our study considered almost all coal and natural gas power plants in the country, whereas most other studies focused on a few sites or on plants within a state.
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From page 28... ...
In estimating the health and environmental damages, the ORNL/RFF and ExternE studies used different detailed models to predict the dispersion of primary pollutants from the power plants and the atmospheric formation of secondary pollutants, specifically ozone and fine particulate matter. Studies of externalities associated with greenhouse gas emissions generally either focus exclusively on these emissions and the associated climate change, as exemplified by the authoritative reports of the Intergovernmental Panel on Climate Change, or focus on other pollutants.
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From page 29... ...
In the absence of government intervention, externalities associated with energy production and use are generally not taken into account in decision making. Box 1-2 provides definitions of the technical terms used in
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Example 2. Many thermal power plants use water for cooling; therefore, they emit heated effluent, which sometimes benefits anglers because fish in cold regions are attracted to the warmer water.
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In the absence of government intervention, externalities associated with energy production are generally not taken into account in decision making. The improved angling is a societal benefit that probably was not reflected in the utility's decisions about where to site the plant and effluent.
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For example, suppose that the power plant in the first example has access to technology that, at a cost of $40/ton, can cut its emissions by 10 tons. Suppose further that the full cost of the effects that residents suffer (for example, health and psychological costs)
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From page 33... ...
If Firm 1 (the hypothetical power plant) in 2005 is emitting E1 tons of SO2, the external damages that we quantify equal the shaded area in Figure 1-1 -- that is, we quantify the total damages associated with the firm's current level of emissions. If the firm were emitting E*
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for a hypothetical power plant (Firm 1) emitting SO2.
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. In either case, a firm would have an incentive to reduce its rate of SO2 emissions to E* . Information on the marginal damages associated with various pollutants, which we quantify for fossil-fueled power plants, is relevant to the efficient regulation of air pollution externalities. Nonexternality Market Distortions and Impacts In markets related to energy production and consumption, many other distortions occur that create opportunities for improvement of social welfare but that are not externalities.
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Energy sources depicted in the figure are fossil fuels (such as coal, petroleum, and natural gas) , nuclear, and the various "renewables" (such as biomass, solar, and wind)
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Figure 1-2 R01631 uneditable bitmapped image energy that these sources represent or into which they are converted for use by industrial and residential users and in transportation. For example, coal is combusted in electric power plants to produce heat that is used to turn turbines (mechanical work)
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From page 38... ...
In Figure 1-6, each end-use sector shows the total 2007 energy use, whether from electricity or from the "primary" energy sources in that sector. For example, the figure shows that industrial end users used 33.4 quads in 2007, 12.0 quads of which were in the form of electricity.
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Table 1-1 shows the sources and end uses selected for the analysis of external effects in this report. The energy sources are arrayed as rows.
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Petroleum is by far the major fuel type for the transportation sector.1-5 electric power, coal is the major Figure For fuel type, followed by natural gas and nuclear power. Energy consumed by the color electric power sector is used to produce electricity consumed by the end-use sectors.
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Electricity predominates in the residential and commercial sectors. Electricity, petroleum, and natural gas are the main forms of delivered energy for industry.
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bOther fuels includes hydrogen fuel cells and coal-based liquid fuels. cElectricity is considered an intermediate energy source (generated from the combustion/use of coal, natural gas, uranium, and renewables)
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Compressed natural gas is also an alternative fuel that may find use in both light- and heavy-duty vehicles. Some of the gasoline in use today comes from energy intensive production of Canadian oil sands; synthetic gasoline (or diesel)
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It may not provide the level of detail of a process-based LCA. An important metric of the system studied is referred to as a functional unit (for example, vehicle miles traveled can be used as the functional unit for LCAs related to transportation)
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Energy efficiency refers to using less energy to achieve the same level of energy-based service; examples include using compact fluorescent light bulbs instead of incandescent ones to achieve the same ambient light level with less electricity and using more efficient internal combustion engines or hybrid systems to achieve the same transportation capacity with less fuel. Identifying and Quantifying Burdens, Impacts, and Damages With the life-cycle stages identified, determining the externalities of energy required the committee to identify the burdens, impacts, and damages associated with each stage.
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From page 46... ...
It is important to realize that estimating most of these impacts and damages is a several-step process based on many assumptions; this is true for even relatively well-understood impacts. Consider one of the TABLE 1-2 Illustrative Impacts of Producing Electricity from Coal Security and Human Health Ecosystems Infrastructure Coal Mining Coal miners' Land disturbance mortality and river alteration, acid morbidity mine drainage Transportation of Death and injury Vegetation damage Load on coal to power plants from accidents from air pollution transportation systems Burning of coal Mortality and Ecosystem effects Degradation of morbidity from air from cooling building materials pollution Water discharges Agricultural shifts and Ecological changes coastal from climate change community impacts due to climate change Disposal of waste Health effects of Ecosystems effects heavy metals in ash of ash and other and other waste wastes Transmission of Disturbance of Vulnerability of electricity ecosystems by utility transmission system to towers and rights attack or disaster of way
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2. Estimate the ambient concentrations of air pollutants (which depend, among other things, on the height of the exhaust stack, the location of the plant, and prevailing wind patterns)
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. . . Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time." Thus, a single power plant might have only minor, or acceptable, impacts on, say, an estuary but the effects of multiple plants might be substantial and qualitatively different from the effects of only one plant.
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From page 49... ...
Damage Estimation: Monetizing Impacts It is relatively straightforward to monetize goods that are routinely traded in markets, as the market prices give direct information about their monetary worth. Thus, if a family is willing to purchase salmon at the market price, then the value of the salmon must be at least as great as the purchase price, otherwise the family would not have been willing to give up the other items its members could have purchased with that money.
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Benzo[a] pyrene 1,3-butadiene Diesel particles PM Cerebrovascular hospital admissions Cases of chronic bronchitis Cases of chronic cough in children Cough in asthmatics Lower respiratory symptoms O3 Asthma attacks Symptom days Noise Myocardial infarction Angina pectoris Hypertension Sleep disturbance Accident risk Risk of injuries from traffic and workplace accidents Building SO2 Ageing of galvanized steel, limestone, mortar, sandstone, material Acid paint, rendering, and zinc for utilitarian buildings deposition Combustion Soiling of buildings particles Crops NOx, SO2 Yield change for wheat, barley, rye, oats, potato, sugar beet O3 Yield change for wheat, barley, rye, oats, potato, rice, tobacco, sunflower seed Acid Increased need for liming deposition
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One practical reason for monetization derives from the multiplicity of external effects and the difficulty of evaluating them in the context of national policy making. From just a partial list of metrics from external effects of coal-fired power plants, there are deaths from coal transportation, injuries from coal transportation, and water temperature increases from cooling-water discharges.
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. Such an approach has been used in the past in the evaluation of federal water projects, but that approach dealt with three or four metrics at a time, not the dozens of metrics associated with the externalities of energy production and use.
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This report includes some aspects of agricultural production in its monetization of the damages from emissions from electricity generation that contribute to the formation of criteria air pollutants. However, changes in ecosystem services, such as nutrient cycling and provision of habitat, and more subtle changes in ecosystem functioning that can affect ecosystem performance have not generally been monetized, largely because it is difficult to quantify those changes at present (for example, Cropper 2000)
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The Nature of Externalities Evaluated in This Study As noted earlier in this chapter, the committee evaluates the externalities associated with energy production and consumption that have not been corrected through existing policies -- that is, the externalities remaining after policies have been implemented. Therefore, the study does not document the substantial progress that has been made in reducing the external damages associated with energy production and consumption over the past few decades.
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Although it is possible to aggregate NOx damages associated with passenger transportation across all stages of the life cycle -- oil exploration and extraction, oil refining, transportation of gasoline to the consumer, and consumption of gasoline by a car -- regulations to limit NOx emissions will be targeted at different stages of the life cycle: Regulations to limit tailpipe emissions will differ from those to limit oil-refinery emissions. Similarly for damages associated with electricity generation, it is important for policy purposes to separate mining damages from those damages associated with electricity generation because policies to control each set of externalities will differ.
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For fossil-fueled power plants, we provide estimates of the damages per ton for key emissions that contribute to criteria air pollutants, as a function of plant location. For CO2 emissions, we provide ranges of estimates of marginal damages.
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Some individuals and groups experience far greater effects from energy production and use than is reflected by the average amount -- that is, than if the effects were evenly distributed -- and others experience far less. In carrying out the committee's task, we focused on the spatial distribution of damages caused by coal-fired and gas-fired power plants wherever they were located and by transportation emissions in each of the U.S.
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From page 58... ...
Likewise, because of greater population density and prevailing winds, the distribution of harmful effects from emissions that form criteria air pollutants is highly nonhomogeneous. For example, populations in eastern seaboard counties bear more of the health-related external costs of this external impact of electricity production from fossil fuels than do populations in upwind areas and will continue to irrespective of any short-term policy choices.
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From page 59... ...
One challenge is that it is very difficult to predict both the future physical effects and their monetary values because they depend on a host of uncertainties about how people in the future will live. A second challenge arises in comparing effects that are quantified in monetary values at different times (such as expenditures on control equipment now and fewer adverse health effects in the future)
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Estimating the discounted cost involves consideration of current greenhouse gas emissions' effects on climate over the next century or more, environmental and human welfare effects caused by climate change, how the effects may vary globally, the course of future economic development, the range and likelihood of economic and social effects arising from climate change, and the extent to which human society might adapt to climate change. Because the choice of a discount rate for such long periods involves great uncertainty, the committee does not recommend a particular discount rate for assessing the value of these effects.
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translating effects into damages that can be monetized. Modeling was required for electricity production and heating -- steps 3, 4, and 5 -- and for transportation impacts -- steps 2, 3, 4, and 5.
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Since that time, numerous studies have estimated intake fractions for various source categories (such as power plants, mobile sources, residential wood burning, indoor cleaning products, and aircraft) and pollutants (such as particulate matter and toxic air pollutants)
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From page 63... ...
The current committee chose to use this approach, and where feasible, it has used alternative scenarios and sensitivity analysis to characterize uncertainties. ORGANIZATION OF THE REPORT The discussion in Chapter 2 focuses on the external effects and their valuations, resulting from electricity generation.
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