Study estimates added costs of US energy production, consumption

US energy production and consumption cost an estimated $120 billion, primarily from motor vehicle and electric power plant emissions, beyond market prices in 2005, the National Research Council said in a study.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Oct. 20 -- US energy production and consumption cost an estimated $120 billion, primarily from motor vehicle and electric power plant emissions, beyond market prices in 2005, the National Research Council said in a study.

Such added costs were significantly lower from power plants using natural gas instead of coal, but “remarkably similar among various fuels and technologies” for transportation fuels, the congressionally mandated report said.

The examination attempted to look past market prices for oil, gas, coal, and other energy sources and their transportation and power generation fuels and at human health costs from air pollution, according to the council, which is part of the National Academy of Sciences.

It said its estimates do not include damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security, which the report examined but did not monetize.

The council said the committee writing the report focused on monetizing damage from major air pollutants (sulfur dioxide, nitrogen oxides, ozone, and particulate matter) on human health, grain crops and timber yields, buildings, and recreation. When possible, it 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.

Coal vs. gas costs
The report estimated total annual external costs in 2005 from 406 coal-fired power plants producing 95% of the nation’s coal-generated electricity were $62 billion, or about 3.2¢/kw-hr, which could drop to 1.7¢/kw-hr in 2030. Its sample of 498 gas-fired power plants representing 71% of the nation’s gas-generated electricity produced an estimate of $740 million of total non-climate damages in 2005, or an average 0.16¢/kw-hr which could fall to 0.11¢/kw-hr in 2030.

Estimated power generation climate damage costs from gas were half that of coal, ranging from 0.05¢ to 5¢/kw-hr, it added.

Noting transportation accounts for nearly 30% of total US energy demand and currently relies almost exclusively on oil, the report estimated motor vehicles produced $56 billion in domestic health and other non-climate costs in 2005. It said the committee evaluated costs from exploration and production to refining and end-use. “In most cases, operating the vehicle accounted for less than one-third of the quantifiable non-climate damages,” it said.

Costs per vehicle mile traveled were similar among various combinations of fuels and technologies (in a 1.2-1.7¢/mile range), and the report recommended caution in interpreting small differences. “Nonclimate-related damages for corn grain ethanol were similar to or slightly worse than gasoline, because of the energy needed to produce the corn and convert it to fuel,” it said. “In contrast, ethanol made from herbaceous plants or corn stover, which [is] not yet commercially available, had lower damages than most other options.”

It said for both 2005 and 2030, vehicles using gasoline made from oil extracted from tar sands and those using diesel derived from the Fischer-Tropsch process (which converts coal, methane, or biomass to liquid fuel) had the highest life-cycle greenhouse gas emissions. Vehicles using ethanol made from corn stover or herbaceous feedstock such as switchgrass had some of the lowest greenhouse gas emissions, as did those powered by compressed natural gas, it added.

The report said fully implementing federal rules on diesel fuel emissions, which require 2007 model year or newer vehicles to use an ultra low-sulfur formulation, is expected to substantially decrease non-climate damage costs from diesel by 2030. The committee considered this an indication of how regulatory actions can significantly affect energy-related damages. Major initiatives to lower other emissions further, improve energy efficiency, or shift to a cleaner mix of energy sources could reduce other damages as well, it said.

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