Air Pollution Costs the West Almost $1 Trillion Annually

Air Pollution Costs the West Almost $1 Trillion Annually | 07/12/14
by John Brian Shannon John Brian Shannon

Air pollution has a very real cost to our civilization via increased healthcare costs, premature deaths, lowered productivity, environmental degradation with resultant lowered crop yields, increased water consumption and higher taxation.

However, air pollution is only one cost associated with fossil fuel use.

Smokestack Image Credit: Alfred Palmer
Smokestack image credit: Alfred Palmer

There are three main costs associated with energy

  1. The retail price that you pay at the gas pump or on your utility bill for example (which is paid by consumers)
  2. The subsidy cost that governments pay energy producers and utility companies (which is ultimately paid by taxpayers)
  3. The externality cost of each type of energy (which is paid by taxpayers, by increased prices for consumers, and the impact on, or the cost to, the environment)

Externality cost in Europe and the U.S.A.

A recent report from the European Environment Agency (EEA) states that high air pollution levels (one type of externality) in the EU cost society €189 billion every year and it’s a number that increases every year. (That’s $235 billion when converted to U.S. dollars)

To put that number in some kind of context, the cost of the air pollution externality in the EU annually, is equal to the annual GDP of Finland.

Let’s state that even more clearly. The amount of taxation paid by EU taxpayers every year to pay for airborne fossil fuel damage is equal to Finland’s entire annual economic output!

It’s getting worse, not better, notwithstanding recent renewable energy programs and incentives. Even the admirable German Energiewende program is barely making an impact when we look at the overall EU air quality index.

Of the 30 biggest facilities it identified as causing the most damage, 26 were power plants, mainly fueled by coal in Germany and eastern Europe. — Barbara Lewis (Reuters)

That’s just Europe. It’s even worse in the U.S., according to a landmark Harvard University report which says coal-fired power generation alone costs the U.S. taxpayer over $500 billion/yr in externality cost.

Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment. These costs are external to the coal industry and thus are often considered as “externalities.”

We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to over one-half of a trillion dollars annually.

Many of these so-called externalities are, moreover, cumulative.

Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive.

We focus on Appalachia, though coal is mined in other regions of the United States and is burned throughout the world.” — Full Cost Accounting for the Life Cycle of Coal by Dr. Paul Epstein, the Director of Harvard Medical School Center for Health and the Global Environment, and eleven other co-authors

The report also notes that electricity rates would need to rise by another .09 to .27 cents per kilowatt hour in the U.S. to cover the externality cost of American coal-fired electricity production.

The externality cost for solar or wind power plants is zero, just for the record

Dr. Epstein and his team notes: “Coal burning produces one and a half times the CO2 emissions of oil combustion and twice that from burning natural gas (for an equal amount of energy produced).”

There’s the argument to switch from coal to natural gas right there

Also in the Harvard report in regards to the intrinsic inefficiency of coal:

Energy specialist Amory Lovins estimates that after mining, processing, transporting and burning coal, and transmitting the electricity, only about 3% of the energy in the coal is used in incandescent light bulbs.

…In the United States in 2005, coal produced 50% of the nation’s electricity but 81% of the CO2 emissions.

For 2030, coal is projected to produce 53% of U.S. power and 85% of the U.S. CO2 emissions from electricity generation.

None of these figures includes the additional life cycle greenhouse gas (GHG) emissions from coal, including methane from coal mines, emissions from coal transport, other GHG emissions (e.g., particulates or black carbon), and carbon and nitrous oxide (N2O) emissions from land transformation in the case of MTR coal mining.” — Full Cost Accounting for the Life Cycle of Coal report

It’s not like this information is secret. All European, American, and Asian policymakers now know about the externality costs of coal vs. renewable energy. It’s just that until recently everyone thought that the cost of switching to renewable energy, was higher than the cost of fossil externalities.

It’s not only an economic problem, it’s also a health problem

Air pollution impacts human health, resulting in extra healthcare costs, lost productivity, and fewer work days. Other impacts are reduced crop yields and building damage.

Particulate matter and ground-level ozone are two of the main pollutants that come from coal.

90% or more of Europeans living in cities are exposed to harmful air pollution. Bulgaria and Poland have some of the worst pollution of the European countries.

An estimated 400,000 premature deaths in European cities were linked to air pollution in 2011. — CleanTechnica

Externality cost in China

Remember the Beijing Olympics where the city’s industry and commercial business were shut down to allow visitors and athletes to breathe clean air during their stay (and Wow!) look at their clear blue sky for the first time in decades. Great for tourists! Bad for Beijing business and industry, with the exception of the tourism industry (for one month) of course.

The Common Language Project reported in 2008 that premature deaths in China resulting from fossil fuel air pollution were surpassing 400,000 per year.

China faces a number of serious environmental issues caused by overpopulation and rapid industrial growth. Water pollution and a resulting shortage of drinking water is one such issue, as is air pollution caused by an over-reliance on coal as fuel. It has been estimated that 410,000 Chinese die as a result of pollution each year. — clpmag.org

The die is cast since it is becoming common knowledge that renewable energy merely requires a small subsidy to assist with power plant construction and grid harmonization — while fossil fuels continue to require truly massive and ongoing subsidies to continue operations.

Subsidy cost of fossil fuels

Already there is talk of ending fossil fuel subsidies, which in 2014 will top $600 billion worldwide

Want to add up the total costs (direct economic subsidy and externality cost subsidy) of fossil fuels?

Add the $600 billion global fossil fuel subsidy to the to the $2 trillion dollars of global externality cost and you arrive at (approx) $2.5 trillion dollars per year. Then there is the more than 1 million premature deaths globally caused by air pollution. All of that is subsidized by the world’s taxpayers.

Compare that to the total costs of renewable energy. Well, for starters, the economic subsidy dollar amount for renewable energy is much less (about $100 billion per year globally) and there are no externality costs.

No deaths. No illness. No direct or related productivity loss due to a host of fossil fuel related issues (oil spills, coal car derailment, river contamination, explosions in pipelines or factories) for just a very few examples.

The fossil fuel industry is a very mature industry, it has found ways to do more with ever-fewer employees, and it gets more subsidy dollars than any other economic segment on the planet.

By comparison, the renewable energy industry is a new segment, one that requires many thousands of workers and it gets only relative handfuls of subsidy dollars. And, no externalities.

It becomes clearer every day that high-carbon fossil must be displaced by renewable energy

No longer is it some arcane moral argument that we should switch to renewables for the good of the Earth; Fossil fuel is proving to be a major factor in human illness/premature deaths, it sends our money abroad to purchase energy instead of keeping our money in our own countries, and the wholly-taxpayer-funded subsidy cost of fossil is out of control and getting worse with each passing year.

The time for dithering is past. It’s time to make the switch to renewable energy, and to start, we need to remove the worst polluting power plants from the grid (and at the very least, replace them with natural gas powered plants) or even better, replace them with hybrid wind and solar power plants.

To accomplish this, governments need to begin diverting some of the tens of billions of dollars annually paid to the fossil fuel industry to the renewable energy industry.

Germany’s Energiewende program was (and still is) an admirable first step. Once Germany has completed it’s energy transition away from oil, coal and nuclear — having replaced all of that generation capacity with renewable energy and natural gas, only then can it be hailed a complete success — and German leaders should go down in history as being instrumental in changing the world’s 21st century energy paradigm.

Dank an unsere deutschen Freunde! (With thanks to our German friends!)

If only every nation would sign-on to matching or exceeding the ongoing German example, we wouldn’t have 1 million premature deaths globally due to fossil fuel burning, we wouldn’t have almost 2 trillion dollars of externality cost, we wouldn’t need $600 billion dollars of direct subsidies for fossil fuel producers — and we would all live in a healthier environment, and our plant, animal, and aquatic life would return to their normally thriving state.

Taxes would reflect the global $2.5 trillion drop in combined fossil fuel subsidy and fossil fuel externality costs, employment stats would improve, productivity would increase, the tourism industry would receive a boost, and enjoyment of life for individuals would rebound.

It’s a truism in the energy industry that all energy is subsidized, of that there is no doubt. Even renewable energy receives tiny amounts of subsidy, relative to fossil.

But it is now apparent that over the past 100 years, getting ‘the best (energy) bang for the buck’ has been our nemesis. The energy world that we once knew, is about to change.

The world didn’t come to an end when air travel began to replace rail travel in the 1950’s. Now almost everyone travels by air, and only few travel by train. And what about the railway investors didn’t they lose their money when the age of rail tapered-off? No, they simply moved their money to the new transportation mode and made as much or more money in the airline business.

Likewise, the world will not come to an end now that renewable energy is beginning to displace coal and oil. Investors will simply reallocate their money and make as much or more money in renewable energy.

A Match made in Heaven: Solar power and Water desalination

by John Brian Shannon

The nations of the Persian Gulf and Arabian Gulf are blessed to have access to unfathomable amounts of sunlight and salt water. With growing populations and scarce water reserves, governments, public or privately-held power companies and water utilities can capitalize on these national assets — when the economics work.

Even when the economics don’t work, human beings still need water! Growing cities need water for domestic use and industry needs water to produce the goods that we buy, or that they export.

The question for Oman is; How much of Oman’s oil and gas is burning up at desal plants — instead of being exported to add to Oman’s GDP?

In previous decades, the power-hungry desalination plants widely-used throughout the Middle East were powered by electricity created from burning vast amounts of fossil fuel. The economics barely worked when the oil prices were low – but now, with oil once more approaching $100. per barrel, they are costing a king’s ransom to operate. Even oil-rich kingdoms are feeling the pinch nowadays.

A cogent case can be made for adopting alternative energy to power existing and future desalination plants – thereby allowing that oil and gas to be sold at export instead of being burned up. Why burn your money?

At $96.80/barrel for oil (April 2/13) and the natural gas price passing $4.08/MMBtu (April 2/13) the annual fuel cost to produce electricity with fossil fuel is unimaginably high. Really, you don’t want to know.

Fossil fuel exports power the economies of rapidly growing Middle East and North Africa (MENA) nations. Each barrel of oil burned for local desal operations, is one less barrel contributing to the national GDP. A similar situation is at play with regards to natural gas in Oman and the other GCC nations.

Modern solar power plants, such as Masdar’s Shams 1 solar power plant can produce 100 megawatts of clean power for 30-years or more, powered only by sunshine. These modern electrical energy power plants are powerful enough to run; (1) a desalination plant, with enough energy surplus to run (2) a nearby town, or (3) a rural areaor, perhaps all three!

There are two basic types of solar power;

  • Photovoltaic solar, properly called ‘PV-solar’ or ‘PV-solar modules’. The solar panels only produce power when the Sun is shining. Which is fine, because the highest electrical demand occurs during daylight hours.
  • Thermal solar, known as ‘Concentrated Solar Power’ or ‘CSP’ produce power 24 hours a day, by storing excess daytime heat in liquids such as molten salt or oil, to run a steam turbine/electricity generator.

PV-solar (panels) have increased efficiency from their 1980’s-era, 11% efficiency rating — to today’s +33% efficiency rating units. Panels with much higher efficiency ratings (perhaps as high as 100%) will hit the market within 20-years. And through all this, PV-solar panel prices have been falling dramatically, to the point that PV-solar utility-scale power plants are now price-competitive with other kinds of power – assuming similar subsidy levels are in place.

Solar Bonus

As PV-efficiency continues to increase through the next few years, just as it has been doing thus far, PV-solar ‘scaling up’ will be very easy. For example, solar panels are size-standardized, so simply unbolting the ‘old’ 11% efficiency panels and replacing them with the ‘new’ 22% efficiency panels, effectively doubles the power output of the solar power plant — practically overnight! (e.g.; 100 MW to 200 MW)

A few years later, when PV-efficiency increases, those (by then) ‘old’ 22% panels can be replaced with ‘new’ 45% efficiency panels – thereby doubling (again!) the total output of the solar power plant. The ‘old’ solar panels will still work fine, and they can be sold to developing nations, or traded-in against the cost of the new panels, just the same way you would trade your old car for a new one.

In fact, PV-solar power now costs less than comparable coal-fired power — and that’s not factoring in the costly ‘externalities’ of coal-fired electrical power generation, which range from huge water usage by coal-fired power plants, to toxic airborne emissions, to adverse health effects on citizens – which prematurely killed 1.2 million people in 2007-2010, in China alone!

solar-coal-power_thumb3.png
PV-solar power now costs less than comparable coal-fired power

CSP solar technology has advanced remarkably and several different designs have proven themselves viable in Spain, the United States and the UAE, although CSP costs are still high when compared to PV-solar and conventional power. This is changing as CSP production ramps up around the world. The one great advantage of CSP solar, is that these power plants produce power 24-hours per day, 365-days per year – and, no harmful emissions.

“Holding nearly half of the world’s renewable energy potential, the Middle East and North Africa are poised for unprecedented growth in renewable energy.” — Masdar

jan_2013_aerial_francois_site_photoshooting_0208_bb__cover
Masdar’s Shams 1 Concentrated Solar Power (CSP) 100 megawatt power plant near Abu Dhabi. image courtesy: Masdar

“The inauguration of Shams 1 is a breakthrough for renewable energy development in the Middle East. With the demand for energy rising exponentially, the region is undergoing a major transformation in how it generates electricity. In fact, the Middle East is poised for major investments in renewables, and Shams 1 proves the economic and environmental advantage of deploying large-scale solar projects.” — His Excellency Dr. Sultan Ahmed Al Jaber, CEO of Masdar. (Read Masdar Shams 1 Press Release here)

It’s safe to say that MENA nations should be planning a long-term switch to solar energy, starting with PV-solar now, and CSP solar starting within the next ten years.

Financing these new, pollution-free power plants could be assisted by GCC government investment (sovereign wealth funds) financed through increased oil and gas exports – as oil and gas will be ‘freed-up’ for sale to international buyers.

It must be said that in areas of the country that make the switch from fossil fuel to solar, the cost of externalities will fall and residents will notice better health and enhanced ‘quality of life’ due to lower airborne emission levels and governments will notice lower health care costs. Not to mention plenty of clean, low-cost water for citizens and industry.

JOHN BRIAN SHANNON

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2012: The Year in Graphs from the WP Wonkblog team!

[Courtesy of:  The Washington Post]

Click here: 2012: The Year in Graphs  Posted by The Washington Post — Wonkblog Team on December 27, 2012

“As 2012 draws to a close, Wonkblog asked our favorite professional wonks — economists, political scientists, politicians and more — to see what graphs and charts they felt did the best job explaining the past year. Here are their nominees.” The Wonkblog Team.

[A special, year-end treat! Such great charts and no opinions to be found. Read the charts, absorb the new information, and make up your own mind.] – Ed.

Happy Holidays!!!

Washington-Post-Logo2-74x74

China’s Dream Team — MY COMMENT

by John Brian Shannon

While some might think that the sky is falling now that a new President of China and a new Chinese Premier will be installed in March 2013 — Stephen S. Roach with his years of professional experience working with many of the individuals involved, tells us in his latest Project Syndicate article China’s Dream Team we should feel hopeful this time around.

Not that we didn’t feel hopeful when President of China Hu Jintao and Premier Wen Jaibao came to power. In fact, I would like to take the opportunity to compliment the team of Hu Jintao and Wen Jaibao for their many successes — including the massively successful XXIX Olympiad held in Beijing.

Both men attended Harvard in younger years, both had plenty of exposure to Western ideas and neither seemed to ‘have it in’ for the West.

Historically speaking, communist leaders have generally displayed skepticism or outright hostility to the West and have been critical of Western thought and actions, even when some Western policies were of little concern to communist nations.

During the tenure of Hu Jintao and Wen Jaibao, China has advanced in many areas and has remained a peaceful partner of the West. In particular, both leaders ushered in powerful policies and regulations to help mitigate the environmental catastrophe which has resulted from such rapid industrialization.

China presently burns more than 3 billion tons of coal each year resulting in the production of 7.2 billion tons of CO2, plus other gaseous pollutants and particulates. These numbers are expected to double by 2020 based on already planned and funded (but not yet built) coal power plants adding to the output from existing coal-fired power plants there.

The successful Chinese program directed by these two great men to dramatically limit nitrous oxides at coal-fired power plants comes to mind. This is important because, according to Wikipedia; “Nitrous Oxide is a major greenhouse gas and air pollutant. Considered over a 100-year period, it has 298 times more impact ‘per unit weight’ (Global warming potential) than carbon dioxide.[2]”

For an overview of the Chinese environmental situation and their response to it (current as of May 2012), please see my UNDP article here:

Or go directly to the downloadable PDF.

Over 382 billion dollars worth of conservation and sustainable energy projects have been announced since May 2012. And, another 56 billion was announced today, December 5, 2012 read the Reuters article here.

By 2020, when China will pump 15 billion tons of CO2 into the air just from its coal plants, any positive conservation and mitigation efforts made now will have enormous consequences then.

Let us hope that the new leadership team is as enlightened about the environment as the previous team. Let’s hope the calm and reasonable approach to international affairs and the wise economic choices of former President Hu Jintao and Premier Wen Jaibao will continue.

Above all, let’s not spoil the atmosphere with fearful or angry rhetoric. Minor irritants must remain minor! China needs us, we need them. Full stop.

Only second in importance to ending the Cold War (which was successfully ended by dialogue, goodwill and cooperation between the various players) is the need for China and the West to find ways to work together everyday for the betterment of the largest number of citizens in China and the West.

If the same degree of dedication, goodwill and cooperation is employed to find ways for China and the West to work together as was done to end the Cold War, everyone on the planet will reap those benefits for decades to come!

I welcome incoming Chinese leader President Xi Jinping and Premier Li Keqiang to their new official positions and hope that Western leaders will reach out with sincere invitations to promote a grander and better vision of our world than was ever thought possible just 30-years ago.

Note: Xi Jinping became General Secretary of the Chinese Communist Party and Chairman of the CCP’s Central Military Commission, giving him supreme authority over China’s armed forces. Next March, he will become President of China as well. Read more here.

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That’s Not the Goal I’m Working For

by John Brian Shannon

It was fascinating to read the Project Syndicate article by Former US Secretary of Defense Harold Brown on America’s trouble with China discussing some of the history and modern-day challenges to Sino-American relations.

Although I have the greatest respect for former Secretary of Defense Harold Brown, I respectfully disagree with his proposed solution to the present challenges. Starting a new Cold War to secure America’s future is a step backward — not a step forward.

Rather, as both Western and Chinese interests converge at so many levels in the modern paradigm, it is in our best interests to work on solutions together.

Instead of the “Win – Lose” thinking of the past, it is incumbent upon us to find ways to “Win – Win” as so much is at stake.

We survived the last Cold War, but that is no guarantee we would survive another one. It’s simply too big a risk to take — especially when there are better options available. And, there are.

The former Secretary of Defense states that; “China’s export-led economic model has reached its limits…” and I believe this is a most profound point.

IF China has reached it’s export-led model as he asserts, it has only done so because there are presently a lack of purchasers to purchase Chinese goods.

For years, China has manufactured products to sell around the world and as long as there has been plenty of disposable income in the West, there has been plenty of sales.

As the Western economies fell backwards — so did Chinese exports.

Funny how that works.

In case policy-makers haven’t yet reached the same conclusions as I, let me say the situation I describe above is easily verifiable and directly correlates with the economic events of the early 21st century.

Whether political leaders in the U.S. or China like it or not, the relationship has been, is, and must continue to be, a symbiotic one.

China NEEDS a healthy, stable and frankly, a wealthy Western world to sell it’s wares to — and the West needs a source of low priced goods to assist growth to continue at lower cost than otherwise would be the case.

The U.S. needs a large export market for its billions of tons of coal and millions of barrels of petroleum that it must sell every year to support those industries here.

By 2017 the U.S. will surpass Saudi Arabia as the world’s #1 oil exporter — according to the IEA — but in actuality, this may occur in 2015.

http://arabiangazette.com/us-top-oil-producer-2017/

Not only that, so many products are manufactured by American corporations in China at lower cost than they could be here — therefore personal happiness is enhanced on a massive scale by products Western consumers can afford. Thanks China!

And without a healthy China (and Japan) who will continue to buy all those T-Bills to float the American economy? Along with all of the other China-driven (and increasing yearly) investment and purchasing of American goods and services.

For the next few decades, the only politics that make over-arching sense will be the politics of economics. For now, more than ever, the politics of self-interest will be the politics of economics and the politics of economics will be the politics of self-interest.

The stronger the Chinese economy, the better the effect on Western economies and Western governments. The stronger the American and other Western economies, the better for Chinese exports.

Any other model will be a lesser model and will bring it’s own problems with it.

As for the long-range bomber advocated for by former Secretary Harold Brown. I too, want a strong, secure and freedom-loving North America — but let us hope the days of Mutually Assured Destruction (MAD) are over.

Instead of sabre-rattling and an ever-present nuclear threat, let us hope that our thinking as a species has moved on.

A Pentagon report laid it out in stark terms a couple of decades back, “it is not a case of if, but of when” a nuclear exchange will take place under the MAD paradigm.

If we can’t co-exist, if we can’t form and retain viable and symbiotic relationships with other nations — every one of us will be dead, eventually. And then, none of it will matter.

That’s not the goal I’m working for.

.

Read more at: http://www.project-syndicate.org/commentary/from-competition-to-confrontation-for-the-us-and-china-by-harold-brown#yD3qLMzsctZhgiyR.99

JOHN BRIAN SHANNON

To follow John Brian Shannon on social media – place a check-mark beside your choice of Facebook, Twitter or LinkedIn: FullyFollowMe/johnbrianshannon