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Published on March 8th, 2015 | by James Ayre

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With “True Cost” Of Emissions Factored In, Gasoline Would Cost $3.80/Gallon MORE Than The Pump Price

March 8th, 2015 by  


If the “true costs” of emissions — increased rates of premature death, illness, increased loads on the healthcare system, lowered crop yields, missed work days, higher insurance damages from extreme weather events linked to climate change, etc — are factored in, a gallon of gasoline would cost you roughly $3.80 more at the pump than it currently does, according to new research from Duke University.

Diesel’s true costs are even higher — unsurprisingly, especially for anyone that’s lived around diesel cars — with the true costs of the fuel adding around $4.80 a gallon more to the price than what’s paid at the pump.

image

Other fossil fuels follow this trend — the price of natural gas doubles, and coal-fired electricity actually quadruples in price. And, according to the research, solar and wind as a result would appear to be somewhat cheaper. It should also be noted that the graph just above doesn’t show the extra externalities (costs) of nuclear, because this work focused on emissions, but clearly nuclear has its costs.

“We think we know what the prices of fossil fuels are, but their impacts on climate and human health are much larger than previously realized,” stated Drew T Shindell, professor of climate sciences at Duke’s Nicholas School of the Environment. “We’re making decisions based on misleading costs.”

This is generally referred to as the externalization of costs, and is more or less inherent in most systems (urination, defecation, etc). Obviously though, at some point (with increasing externalization), these externalized costs begin to impact other systems that the system in question depends upon, and the true costs of an activity begin to become apparent. It’s simply that something else or someone else was dealing with them before, but now you have to as well — as the scale of the previously externalized costs has increased.


 

According to Shindell, the new study should give policymakers a more accurate framework for “estimating the costs of a broad range of health, climate and environmental damages linked to emissions from fossil fuels, industry, biomass burning, and agriculture (industrial-scale, resource-input intensive GMO agriculture in particular).”

As Shindell rightly noted, markets don’t place a price on most atmospheric emissions. As a result, polluters don’t pay any costs — we do, and for that matter, the wider animal and plant communities of the world do as well. (I doubt that microbes are affected ‘positively’ or ‘negatively’ much one way or another. Seems they can make do with practically anything.)

These unpaid costs are of course huge — industrial emissions (and other forms of pollution as well) are responsible for huge burdens on the healthcare systems of the world, the workforces, the agricultural systems, and, increasingly, on the stability of the climate.

As noted, though, these are hard-to-quantify costs: “Putting values on many of these social costs can be challenging because there are so many factors in play.”

It should also be noted here that the study didn’t include many external costs that were harder to quantify: ocean acidification, the effects of common forms of air pollution on intelligence or on the endocrine/hormone system, etc. Big problems, in other words, that weren’t factored in.

A recent press release provides more on that matter:

The comparative framework devised by Shindell to calculate these costs is built upon a widely used methodology introduced in 2010 to help the US government determine the social costs of carbon. Shindell’s models extend the scope of those calculations to cover a much wider array of pollutants and impacts, including damages from potent but short-lived climate pollutants (SLCPs) such as methane and aerosols, as well as longer-lived greenhouse gases such as nitrous oxides. The new models incorporate the most current data available to give policymakers accurate estimates of monetized damages.

“Looking at electricity, for example, the US Energy Information Administration estimates generation costs per kilowatt hour of power to be about 10 cents for coal, 7 cents for natural gas, 13 cents for solar and 8 for wind,” Shindell stated. “Not surprisingly, the US has seen a surge in the use of natural gas, the apparent cheapest option. However, when you add in environmental and health damages, costs rise to 17 cents per kilowatt hour for natural gas and a whopping 42 cents for coal.”

Gasoline, as mentioned above, is a similar case — if the social costs are added in, then a normal mid-range gasoline-powered vehicle is causing roughly $2,000 a year in damages. Whereas these costs are notably lower with electric vehicles — roughly $1,000 a year if the electricity is coming from coal-fired power plants; around $300 a year if the electricity is coming from natural gas power plants; and considerably less than that if the electricity is coming from renewables (a very strong trend downwards).

Shindell notes, it should be stated here, that owing to the inherent complexity of determining/establishing universal values for health & environment damages, this recent work is clearly not the last word when it comes to the “true costs” of emissions (hence the quotation marks).

“There is room for ongoing discussion about what the value of atmospheric emissions should be,” as he worded it. “But one thing there should be no debate over is that the current assigned price of zero is not the right value.”

A final note: according to the study, the total environmental costs of producing electricity in the US totals $330–970 billion a year. If these costs were truly factored into our economy, I’m getting the impression that the excess wealth wouldn’t be there for everyone to own a personal automobile, or to travel abroad on vacations (via jets) every other year, amongst other things.

The new findings are detailed in a paper published in the journal Climatic Change.

Image Credit: Duke University






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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Every calculation that I’m familiar with start at $15.00 a gallon, and go up from there. Besides how can you put a price on extinction?

  • Epicurus

    The promoters of the “free market” never admit that there are external costs. They seem to assume that there is a god given right to poison the air and water. Nor do they admit to the deaths and sickness caused by these externalities.

  • jburt56

    You’re on solid ground. Joseph Stiglitz estimated $5 trillion total cost–

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acXcm.yk56Ko

  • An interesting perspective! One that needs omni-partisan legislative comprehension, understanding, and support. Since the cost of mining a toxic substance, and then using it for greater ill effect has a definitive cost, knowing what these cost factors are is very enlightening. Well done!

    • Agreed. The moment we all start paying closer to the real costs, is the moment is all changes. Before that we have a “right” to cheap oil which is what we are taught to utter, giving us the right to do stupid things that we wouldn’t do if we were paying a fraction of the real cost.

      • Raahul Kumar

        Paying attention to real costs will break the entire Capitalist system. I think you don’t understand what you’re talking about. The entire wealth of the West is a gift from coal. Not wind, not solar, not anything else but coal.

        If the real cost had been paid, the USA would have been far poorer in GDP terms, but better off in terms of health. Can you so easily trade off thousands of dollars for some years of extra life? Most Americans would make the opposite trade. That’s what Capitalism means. Destroy everything for the dollar. And it has, in fact, made the USA wealthy. At a certain cost.

        • sault

          The real costs of pollution were paid, except they came in the form of higher healthcare bills, lower worker productivity and premature deaths. Sure, some of this was necessary in the course of building a modern lifestyle, but how much of it was just to prop up useless consumption that doesn’t make anybody happier and only lines the pockets of the rich?

          Not incorporating all the costs of a fuel into its price is actually a form of Socialism. We all share in the burdens that pollution and climate change foist upon us while the government-chosen “winners” called coal, oil and gas reap huge profits and taxpayer-financed subsidies. The failure to incorporate the damages of pollution is the largest distortion of the “free” market in human history.

          • Epicurus

            Socialize the costs, privatize the profits: the American Way.

          • Raahul Kumar

            The Free Market has never priced in pollution from the start. If we do start pricing in pollution and the other bad things that happen as a result of industrial activity, how many of those activities would even be profitable?

            Is coal mining a viable industry with a carbon tax? The short answer is no.

            It winds up with a system that involves Green GDP and pollution taxes of all kinds. The Polluter pays principle. This is a radical change that would break the existing societal structures as we know them today.

            It’s an obvious improvement, but the fact is that people hate change, even change for the better. People have to dragged kicking and screaming to the water, then forced to drink. The horse can never be left alone to drink of its own volition, it won’t do that in time.

            The only party that might support that is the Greens. I can’t imagine the mainstream parties ever supporting this, they are reliant on big corporations and unions for their power and funds.

        • OK, that does not mean there is not another path to wealth. Just because the US squandered its resources does not mean they could not have done even better. Look at Switzerland where they have virtually zero resources has had the strongest currency for a hundred years.
          when there is plenty, any fool can make money by destroying more wealth than they create but try to get it back. Look at the Grand Banks which was the greatest source of protein the world had seen and funded the European renaissance; now wasted to nothing. What else can be destroyed for short term gain?

          Colin Genge

          • Raahul Kumar

            The fear is that development is not possible without fossil fuels. All countries have only grown rich on the back of coal.
            That there is another path to wealth is theoretical, since no country has actually gotten rich off the back of wind, solar or other renewable energy.

            But oil, gas and coal has made many billionaires. And the people want development today, not tomorrow. Short term results is exactly what people in a democracy want, not to be better off in the long term. They want it now!

            Of course, the long run view is much more sensible. However that view is a distinct minority, and not many people anywhere in the world have embraced that philosophy.

            What is needed are practical examples of countries getting rich by developing solar. A Solar Sheikh, rolling in wealth, just like Saudi Arabia does today. An example that going green doesn’t mean poverty.

            I don’t see anything that advertises green products in that way, of promoting wealth.

          • Here is one example. The British Empire on which the Sun never set owed much of its wealth to the Royal Navy that was fuelled 100% by wind.

            Colin Genge

          • Raahul Kumar

            Clever example, but the British Navy switched to coal and oil soon after. So it’s a bit of a mixed example? The UK didn’t become a world power until after the advent of steam, really. They were at their maximum extent at 1921, which was only possible because they had oil then.

            But fossil fuels have huge costs in terms of health and environment, so I guess the better way to look at it is in terms of overall or net cost. If you end up dying as a result, the extra money isn’t worth it.

          • Britain acquired North America, including the current USA, Canada, South Africa, New Zealand, Australia, South Africa, India, Pakistan and several more colonies under sail alone. At the conclusion of those escapades, they must have looked pretty good as a wind powered economy. They didn’t do bad with steam power but after wind power, things got murky.

            The USA today is having the life sucked out of it from importing so much oil. It has a lot of life to lose but would be much more powerful if it could rid itself of the over use of oil and the trillions $ that flow out as a result.

            Colin Genge

  • Very good points PaulScott.

  • Bob Fearn

    The actual cost of many things is unknown without a lot of calculating that companies prefer to forget. There is a reality that makes it pretty simple. The cost of pollution is greater than the cost of preventing that pollution.
    Until that is understood emerging economies like China will continue to create massive problems without realizing that it would have been cheaper to do it right in the first place.

    • Agreed. The moment we start paying closer to the real costs, is the moment it all changes. Before then, we can still think we have a “right” to cheap oil which is what we are taught to utter, giving us the right to do stupid things that we wouldn’t do if we were paying a fraction of the real cost.

  • rockyredneck

    This is getting a little ridiculous.
    Are we going to start calculating the external costs of a field of corn, the sidewalk in front of your house, the footprint of our cities, the space you use when you lay down or the garbage you generate.
    Everybody and the whole environment bears the cost of supporting you and your lifestyle. Even the most primitive society has an impact that is mostly only lessened by their populations.
    We need energy to support even our basic needs. We can and will provide it in cleaner and cheaper ways as time goes on.
    Focusing on the negatives does very little to effect change. Replacing our systems too quickly would have environmental effects as well. Replacing high cost systems with less costly only makes sense if the cost of replacement is recovered in a reasonable time.
    Yes, building a new car, wind turbine, high rise, or hydro dam has external costs of their own, which may be higher than using the existing product or system to the end of it’s useful or economicaly viable life.

    • PaulScott58

      We don’t expect the external costs to be internalized all at once, but to let dirty energy continue to pollute without any consequences is just not sustainable.

      Rational people have been asking for a carbon tax for a long time. You start small and let all consumers of the products that use dirty energy know that the tax will grow over the years until all the costs are internalized. This gives people time to learn how to drive more efficiently, switch to a more efficient car, or eventually switch to an electric car or use mass trans.

      • rockyredneck

        A sensible approach is good. It is the ‘burn down the outhouse down’ attitude that has me concerned. If a you don’t have a working flush toilet in place you could end up with shit all over the place.
        I don’t necessarily agree that a carbon tax is the best approach. Higher taxes on gasoline in many jurisdictions seem to make sense. Incentives to switch to cleaner energy technology also has merit, in my opinion.

        • PaulScott58

          If not a carbon tax, then what? We’re usiing incentives now to get people into EVs, but they are only marginally successful even though the EVs are superior to the internal combustion cars they are replacing. The right wing media are trashing them which slows adoption rates. And the Republicans in Congress are trying to remove the incentives.

          • rockyredneck

            The price of electric cars must come down and there is every indication that they will. I don’t think governments can afford to apply adequate incentives to EV’s for widespread adoption. Beyond that there must simply be more EV’s manufactured in order to make a noticeable dent in the global new car market. I have not noticed media being critical of EV,s right wing or otherwise. From my viewpoint, most media is left wing.
            Incentives in some jurisdictions has been very effective in improving the energy efficiency of houses so it is not a given that they do not work..
            Electricity production is at least as big a problem as transportation and incentives to industry to replace dirty technology with clean, might be more effective

          • PaulScott58

            Fox News has been bad-mouthing EVs for years. Here is 3:16 worth of Neil Cavuto’s ranting on the Volt, for instance:

            http://mediamatters.org/blog/2011/08/23/video-neil-cavutos-bizarre-hatred-for-the-chevy/182259

          • rockyredneck

            I didn’t think anybody actually watched Fox News, and I am really surprised they are taken seriously.

          • Bob_Wallace

            Subsidies for EVs were not designed to get people to buy more in the sense that we might subsidize milk for children. The idea was to create enough market to allow EVs to scale up and bring their prices down.

            We’ve been promised <$40k (~$30k with subsidies) in the next couple of years. That should boost the market enough to bring prices under $30k without subsidies. Then, IMO, it's just a matter of fine tuning manufacturing to bring us EVs priced like gasmobiles.

            The press (right, center, or left) continually publishes articles trashing EVs.

            We need to attack grid power and transportation power at the same time. In fact, EVs will make it easier to incorporate larger percentages of wind and solar on the grid without the need for storage.

          • rockyredneck

            Increasing the demand for electricity with widespread EV adoption is one way to provide more market for clean generation. It will not necessarily reduce the use of current generating facilities.
            You must read or watch different stuff than I do. Almost every review I have seen of EV,s has been favorable. That doesn’t make everyone a fan. There are a lot of factors to consider when buying a new vehicle and an electric does not fit the bill for everybody.

          • Bob_Wallace

            EVs will create a new market for onshore wind. Right now wind can’t make much money during off peak hours because thermal plants underbid then in order to stay in operation.

            A market for off peak wind means more profits which will bring in more investment. And that means more inexpensive wind on the grid during peak hours to pull down price ceilings.

            Thermal plants are getting killed by low off peak prices (losses) and the inability to make up those losses during peak hours.

          • Raahul Kumar

            I fail to see the case for EV’s. In fact, the case is against cars in any, shape or form, including fuel cell cars. It would be much better to focus on mass transit.

            It makes much more sense to spend the money wasted on subsidizing EV’s into rail instead. Anyone rich enough to buy a Tesla might as well pay full list price. A bus or rail car moving hundreds of people make much more sense than one car moving one person.

          • rockyredneck

            Thought about this a bit more. In the U.S I believe almost all the oil,coal and gas is privately held, in which case a carbon tax may be appropriate. This is not always true. In Canada the oil, coal and is almost all owned by the province where it is located. The royalties can be adjusted to add cost. The main restriction is competition for investment capital. A U.S. carbon tax could reduce the competition for dollars.

    • Analyzing external costs isn’t the slightest bit ridiculous. Dirty energy is ridiculous.
      …Your post, every paragraph of it, reads suspiciously like talking points from the dirty energy industries.

      • rockyredneck

        Bull.

  • wattleberry

    This raises a fascinating conundrum. Isn’t one of the main right wing dogmas that the costs of consumption are borne by users as much as possible? If so, bodies such as the GOP ought to be wildly enthusiastic about renewables, shouldn’t they?

    • sault

      That assumes the GOP has any shame left or any lingering respect for intellectual consistency. That’s quite a leap!

  • Shane 2

    ***The Iraq war was clearly fought because of their oil***
    Really? We spent two trillion dollars and didn’t get their oil! We started a civil war that constrained their oil production meaning higher prices than we would otherwise have to pay for oil importation! The price of oil is mainly due to global supply and demand and speculation about future supply and demand. We helped overthrow Gaddafi in Libya, and that lead to civil war that restricted oil exports to western countries including oil pumped by western companies! We put sanctions on Iran that also means higher oil prices for oil importing countries like the USA.

    • Hermit_Thrush

      But America’s reassured that oil from most of the world will continue to be denominated, bought and sold in US fiat dollars. It’s all what really matters.

    • PaulScott58

      Correct, we fought the Iraq war because of their oil. We didn’t fight it so the American people could have access to the oil, we fought the war so Exxon/Mobil and Chevron could get access to the oil. And they did get access. Those soldiers died for corporate profits.

      • Michael B

        But don’t you know that “corporations are people, my friend”? It would almost be funny if it weren’t so twisted.

      • Shane 2

        It is true that a small proportion of money earned from selling Iraqi oil goes to American companies. The total earnings for EU, Russian, and Chinese companies is substantially greater so those soldiers provided more assistance to non-American companies. Russian and Chinese State owned companies benefited so it is nice to know American troops put themselves in harm’s way for the Russian and Chinese states. Similarly the American tax payer assists the Chinese and Russian States. I have to laugh. It reminds me of when the American Taxpayer spent a fortune on subsidizing agricultural production and giving export subsidies that allowed the Soviet Union to import food at low prices. American drug companies reap massive profits from the US market. That helps pay for the R and D. Other countries buy the drugs at much cheaper prices. The US tax payer and consumers are the gift that keeps giving.

        • Epicurus

          “the American tax payer assists the Chinese and Russian States . . . . American drug companies reap massive profits from the US market. . . . Other countries buy the drugs at much cheaper
          prices.”

          And all the “foreign aid” we give, like the billions we give to Israel, comes with strings: the money must be spent for American arms and military equipment. In other words, our “foreign aid” is this: taxpayer money which ends up in the pockets of American military contractors.

          America is basically a huge collection of corporate scams and rip-offs, aided and abetted by the government which is bought and paid for by the same corporations. The American education system insures that the citizenry cannot think critically enough to realize it. I recently had to go to the emergency room of a local hospital because of a severe stomach ache. I received some blood tests and a pain killer and was prevented from leaving for three hours. The bill: over $4000. They charge whatever they want because they can get away with it.

    • djr417

      how did the US overthrow Gaddafi? That was a civil war. While other US actions may have restricted the oil supply globally, the US buys most of their supply from Canada. It could be argued that while cheaper oil prices worldwide helps the US, the rise of natural gas production in the US helps much more.

      • rockyredneck

        Yes, Canada supplies about half of what the U.S. imports. However, Canada is also the only country that the U.S. exports crude oil to. I believe about 20 to 25% of the import amounts.

      • Shane 2

        Gaddafi would have crushed the uprising early without US, UK, and French bombing.

        • Shane 2

          The price paid for Canadian oil is closely related to the global supply and demand, not North American supply and demand.

    • sault

      We invaded Iraq because George W saw the movie “Three Kings” and thought it was badass. Also, he was mad that Saddam tried to assassinate his “Poppy”.

      Well, maybe not…but look at the profits Halliburton, KBR and other companies tailor-made to suck the juicy profits out of a fuster cluck like Gulf War II made. Plus, we had to stop Saddam from trading oil in Euros or the financial position of the USA would go down the toilet.
      Finally, the Partnership for a New American Century (PNAC), basically the think-tank that cooked up W’s foreign policy, thought a victory in Iraq would secure a GOP / conservative political hegemony for a generation. Now, most conservatives disown W and can’t be counted on to even keep the government running when they’re not hobbling it with self-inflicted crisis after self-inflicted crisis.

      • Shane 2

        Another reason for the invasion was what was perceived to be Israel’s interest. America has many very pro-Israel people including including scores of millions of Christian Zionists. The 50 standing ovations for the right wing Prime Minister of Israel (Netanyahu) before a joint session of Congress was embarrassing.

  • Marion Meads

    But the GOP would argue that the trickle down economics of war expenditures charged by the defense contractors, the loss of jobs of dispensable soldiers being filled by civilians, and the exorbitant prices (upwards of $200/gallon) charged by Haliburton for the delivery of fuel during the war, helps improve the US economy, starting with the very rich GOP-connected defense contractors.

  • cutter1954

    These are external costs that we are already paying indirectly.if we paid $7 per gallon we would rethink why we typically buy cars and trucks that get 25 mpg rather than 50 mpg (prius) or $80 mpg (volt).I don’t see the problem.

  • vorten

    Oil pollutes my air and I don’t like it. I never gave them permission to pollute my air. Profits of every Oil Company is therefore illegitimate and must be turned over to the peoples’ whose air they have polluted.

    Do the oil companies say sorry about ruining your air, let me compensate you with some money, some cash. Does the Big Oil company say of course I foul your air, even if you don’t use my product, even if you aren’t my customer so then I will work to make sure that Oil that we process won’t’ do that in the future. Does any government say I will protect you from oil pollution? Where I am I to turn to make the Oil company stop polluting my air, my children’s air.

    Take away the profits of the Oil companies, if they want to continue to produce oil that fouls my air they cannot make a profit off of their actions at the same time.

    Let other energy industries bloom that do not pollute my air, Let Solar and Wind and Hydropower companies keep their profits since they don’t pollute. And if ever Oil companies want to make a profit let them clean the air they first polluted and never pollute again be the low bar of their continued existence.

  • globi

    Besides that new nuclear is not available for 11 cents/kWh: Solar is cheaper than new nuclear in America, Europe, Australia, Africa and Asia.

    • Bob_Wallace

      Correct. Eleven cents is the LCOE calculated by Citigroup several months back. They stated at the time that electricity would be about 11 cents if there were no more delays or budget overruns .

      Since then completion date has been pushed out 18 months which has added about $1.4 billion to the finished price.

      Citibank also stated that there should be no expectation that future reactors could produce 11 cent/kWh electricity. The Vogtle price will be unusually low due to recession era extraordinarily low interest rates. IIRC Vogtle received 0% financing their first year and then 2% financing going forward.

      • globi

        And needless to say that the Hinkley C nuclear reactor in Britain is even more expensive and solar contracts have already been sold for around 5 cents/kWh. link.

        • sault

          Yeah, Hinkley electricity could be selling for $0.45 per kWh in the 2040’s given the juicy contract they were able to secure! Solar power could absolutely be “too cheap to meter” by then and be more of a fungible commodity like municipal tap water is today.

      • Will E

        Areva nuclear construction time in Finland is 10 years overtime and construction cost billions over
        estimate costs. google info, see for yourself
        and nuclear decommission Sellafield UK 100 billion, added 2 billion a year,
        expected time span 100 year.
        how much cost Fukushima decommission, what time span,
        and Stjernobil, was 25 years ago,what is happening now.
        what is decommission cost of Vermont
        nuclear plant,
        what is the calculating data of that bank,
        or is it a wet finger in the air.

  • Ross

    That would put it up to approximately the average price of a gallon of petrol in Europe. http://autotraveler.ru/en/spravka/fuel-price-in-europe.html#.VPyv_1OsUyA

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