Many comments are welcome
Unlike the internalized costs covered in the previous chapter of the Seeking Consensus project, there exists a large degree of uncertainty about the magnitude of externalized costs. Everyone is therefore encouraged to contribute what they deem to be reasonable estimates of externalized costs so that we can gather some meaningful statistics from the community. Please follow the simple guidelines at the bottom of this article when commenting.
What is meant by “externalized costs”?
Externalized costs are costs associated with energy consumption which is not reflected in the selling price of the energy. These costs are directly or indirectly paid by other sectors of the economy in forms such as increased healthcare expenditures, losses in property values, increased costs associated with natural disasters, and a reduction in the free services rendered by the biosphere.
Externalized costs of coal
Coal is certainty the dirtiest fossil fuel with the greatest external costs. One ton of coal emits about 2.2 tons of CO2 when combusted. A little under 10% of additional emissions are released during extraction and processing (mostly methane).
Coal combustion also leads to the release of local air pollutants such as nitrous and sulphur oxides and particulate matter which can damage the health of local populations. These pollutant problems can be very serious in older plants with no pollutant control, but new plants being built at present are subject to much stronger regulations, cutting pollutants by close to an order of magnitude. A review of recent literature gave an average local pollutant cost of $24/MWh.
To estimate the climate change externality, we need to estimate the average global CO2 cost. According to the outline in the previous article ($53/ton for developed nations and $24/ton for developing nations), this amounts to $27/ton given that the projected buildout of new coal-fired capacity is 9/91 in developed/developing economies according to the latest IEA prediction. As shown below, the IPCC gives the total carbon intensity of new pulverized coal plants as 0.8 ton/MWh. This carbon intensity needs a plant efficiency around 45%. These assumptions return a CO2 externality of $21/MWh.
For the short-term local externality of $24/ton, we apply a weighting factor of 0 for developing nations and 1 for developed nations. As discussed in the previous article, this accounts for the estimation that internalization of this short-term local externality will have no meaningful impact on economic development in developed nations, but will come at a cost greater than the externalized cost in developing nations by hampering the development of impoverished local communities. This calculation yields another $2/MWh of external costs to give a total of $23/MWh.
The external cost of coal electricity using different CO2 costs and other external costs is given in graphic form below. All calculations reported here can be downloaded in Excel format here.
For perspective, the internalized cost of coal-fired electricity amounted to $39/MWh.
Using the same assumptions as outlined for electricity above, an externalized cost of $2.9/GJ can be calculated. The sensitivity of this number to different values of CO2 cost and other external costs is shown below.
The internalized cost of coal heating was found to be $2.2/GJ for comparison.
As shown below, the IEA puts the well-to-wheels greenhouse gas emissions of coal-to-liquids technology at about 210% that of conventional oil.
Using the CO2 price listed above, coal-to-liquids technology would result in a climate change externalized cost of $36/barrel.
The short-term local externalities are estimated in a similar way as in the previous oil externality article. The only difference is that the externality cost is multiplied by 210% under the assumption that other pollutants increase proportionally to greenhouse gasses. This yields an additional externality cost of $5/barrel, bringing the total to $41/barrel of final fuel ($0.25/litre or $0.96/gallon).
To illustrate the externalized costs of coal-derived transportation fuel under different assumptions, the graph below is given.
For perspective, the internalized cost was found to be $0.44/litre.
In order to assist in finding the consensus view on this topic, please follow these simple commenting guidelines:
Three types of comments are welcome, each introduced by a keyword:
- DATA: Please provide your estimate of the externalized cost of coal with a brief explanation. Each DATA comment will be weighted by the number of “likes” when the data is ultimately processed.
- REBUTTAL: If you strongly disagree with an existing DATA comment, please write a short rebuttal. The “likes” received by a REBUTTAL comment will subtract from the “likes” of the DATA comment. A REBUTTAL comment can once again be rebutted to reduce its weighting.
- CORRECTION: If you see a clear error in the numbers presented in the above analysis, please correct me so that I can correct the article.
Many comments are welcome. More data = greater accuracy.