How much would electricity cost in the United States if the retail price reflected the health impacts of burning fossil fuels? A paper recently published by researchers at the Environmental Protection Agency finds that accounting for such costs would add an average of 14 to 35 cents per kilowatt-hour to the retail cost of electricity. Nationwide, these hidden health costs add up to as much as $886.5 billion annually, or 6% of GDP.
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Combine the average retail cost of electricity to the health impacts from fossil fuels, said Rizk and Machol, and “on average, U.S. consumers of electricity should be willing to pay $0.24–$0.45/kWh for alternatives such as energy efficiency investments or emission-free renewable sources that avoid fossil fuel combustion.” They suggest that pricing recognition of these hidden costs could take the form of a so-called “health adder” policy “to more fully account for adverse climate and health impacts associated with fossil fuel usage.”
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Rizk and Machol make clear that future analyses will likely find their estimate of the economic value of health impacts from fossil fuel electricity, $361.7 to $886.5 billion annually, to be an underestimate. Their study, they note, “does not attempt to include all externalities,” nor do they “attempt to complete a full life cycle assessment of all externalities associated with fossil fuel electricity or its alternatives.”
When a carbon tax is discussed we hear fossil fuel companies howl about what increased costs would mean to consumers. Too bad consumers don’t know or aren’t told that they are already paying the additional price for fossil fuels, which include climate change, something this study doesn’t include.
Think about the issue this way. If all the science and health warnings are wrong, then switching over to clean energy will only cost us money. If the fossil fuel industry and climate change deniers are wrong, humankind will have sunk large areas under rising oceans and eventually make the earth uninhabitable for ourselves.