CLIMATE SPECTATOR: Taking account of coal's full cost
Coal's impact on human health is well documented in the scientific literature, but not the accountant's ledger. With more accurate costing solar would look cheap by comparison.
Hopefully the day will come when Alan Kohler points to his daily graph on ABC News and announces knowingly "today the cost of coal has doubled... there was an unfortunate accounting error in yesterday’s price”. He will have taken a vital step for humanity and human health.
"Coal is the cheapest source of energy” is the oft-repeated mantra not only of industry but of ministers. It is only cheap under accounting that ignores full costs. With full cost accounting of externalities it is likely to be the most expensive fuel and the acceptance of this simple concept would pave the way for the renewable revolution.
External costs include direct environmental damage to water sources, land and food production, and infrastructure damage from extreme weather events due to rising green house emissions, but the major costs are on human health. Mining, transporting and combusting coal increase air pollution with particulates and noxious gases.
These health impacts were a major factor in a 2011 paper, published in the influential American Economic Review, which found that the costs of air pollution caused by the coal fired power industry were at best 80 per cent of industry value added and at worst 5.6 times greater. The paper, Environmental Accounting for Pollution in the United States Economy was co-authored by respected US economist, William Nordhaus, and its findings have not been contested.
Other studies in the US vary only in the degree of culpability of the industry. In 2005 the National Academy of Sciences estimated that the cost of pollution from power stations was about $62 billion or 3.2 cents for every kilowatt-hour of energy produced. Again, health costs were the/a major contributor to these costs.
This cost did not include the externalities from mining. When mining and climate change costs were added in a study published in the New York Academy of Science, 18c per kWh was added to the cost of electricity.
This month testimony before the US House Oversight Subcommittee on Energy Policy, Health Care, and Entitlements estimated the human health cost of coal fired electricity to be between $37 billion and $90 billion annually.
In Australia studies are sparse; taking all externalities from electricity combustion into account, including the health burden of coal, the cost was estimated by the Australian Academy of Technological Sciences and Engineering to be $2.6 billion per annum. This modest account does not include the externality costs of mining and transport within regions like the Hunter.
All studies in the literature indicate that the true cost of coal is much greater than the market cost. There are no studies which contradict this view. But can we extrapolate the findings of US studies to Australia? Caution is needed on two matters. The externalities of mining coal are likely to be greater in the US. The mountaintop mining in some regions has a devastating impact on land and water resources. Health costs are greater than in Australia. But even allowing for these factors the burden of Australian coal is likely to be significant.
How can it be that we continue with the fallacy that coal provides the cheapest energy? Industry has no responsibility; the same transfer of externalities applies with many industries. It is the responsibility of governments to apply polluter-pays principles and to protect human health. Coal is one of the major public health issues of our time, a major international cause of health and lung disease including cancer of the lung and a reduction of life expectancy.
The curse of tobacco merited legal action by government, while the curse of coal addiction receives nothing but silence.
As doctors we have to try to understand the reasons for this inaction. For politicians who use the economic grab every day it would be too difficult to accept that the economic accounting system they use is flawed. We still live in the paradigm of coal. The problem it presents is so great there must be an element of denial in the need to accept transition to clean energy. It could be an electoral slag heap. And then there is the powerful mining industry... and the need for revenue.
It is essential that we apply full cost accounting to all energy sources for it is possible that unconventional gas may not fare better than coal. Solar thermal with storage is assessed by CSIRO to compete with coal as early as 2016; it is likely to be cheaper already on true cost accounting.
We must think within a new paradigm.
Dr David Shearman is the founder of Doctors for the Environment Australia.