Tuesday, October 4, 2011

Coal = Dirty Air & Climate Change

Several days ago at Legal Planet, Dan Farber discussed a recent article in the American Economic Review that shows that coal-fired power plants in the US have air pollution damages larger than their value added.  I have run across a couple other excellent sources recently that also give a great sense of just how dirty and harmful coal-fired power plants are.  In 2010, the National Research Council published a study titled “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use.”  The NRC found that the aggregate damages from SO2, NOx and particulate matter from coal-fired power plants in 2005 were about $62 billion, or $156 million on average per plant (a median cost of 3.2 cents/kWh).  And this doesn’t even include the hidden costs of other parts of the coal lifecycle, such as pollution from coal mining.  A 2011 study out of Harvard Medical School calculated the lifecycle costs of coal at 17.84 cents/kWh.

The NRC also discussed and made a very preliminary estimate of the climate-related damages of coal-fired power plants.  Choosing $30/ton as the social cost of carbon, the NRC calculated climate-related damages at an additional 3 cents/kWh.  But $30/ton is a pretty conservative estimate of the social cost of carbon. It’s a bit higher than the US government’s $21/metric ton estimate but lower than UK’s range of $41 – $124.  Also, a recent analysis by Frank Ackerman and Elizabeth Stanton suggests the social cost of carbon could be as high as $900 in 2010 and $1,500 in 2050.

Based on the NRC's analysis, we are bearing a cost of 6 cents in pollution damages for every kWh of electricity produced with coal, which gets close to the difference in cost between what is often referred to as “cheap energy” from coal and “expensive energy” from solar. (Wind is in many cases cost-competitive with coal without considering the 6 cents/kWh in pollution costs - see a comparison of costs here).  If we factor in the full lifecycle costs of coal and a more realistic social cost of carbon, renewable energy looks downright cheap. 

- Lesley McAllister


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