Thursday, August 02, 2007

The True Cost of Coal

The profits that the old coal plants without pollution controls rake in are not simply a consequence of the fact that coal is cheap and plentiful. These plants are legal mints because the regulatory system fails to account for the social, environmental, and public health costs of burning dirty coal - what economists call "externalities." All other things being equal, dirty megawatts from old coal burners are almost always cheaper than clean megawatts from other sources. The real cost of those dirty megawatts - the devastated mountains of West Virginia, the heart attacks and asthma caused by air pollution, the pumping of greenhouse gases into the atmosphere - are all offloaded onto the public. How would competition in the electricity markets change if these costs were factored in? According to a ten-year study known as ExternE, which Princeton University professsor and energy expert Robert Williams calls "state of the art," factoring in just the public health effects of air pollution from U.S. coal plants would add an average of about $13 per megawatt-hour to the price of coal-fired power. (This does not include damages connected to mining, nor does it include costs related to global warming.) For the big dirties, added costs could be as high as $33 per megawatt-hour. In comparison, the cost of externalities on a natural gas plant are only about 40 cents per megawatt-hour. In a market that accurately reflected the true cost of power, old coal burners would be shut down because the price of the power they generated would be too high for the market to bear.

From "Big Coal: The Dirty Secret Behind America's Energy Future" by Jeff Goodell