Unseen Subsidies: The Hidden Costs of Fossil Fuels
When we talk about the costs associated with fossil fuels, the discussions often revolve around visible expenditures like tax breaks, low-interest loans, and direct government assistance. However, there are several hidden subsidies that are not as apparent but significantly impact our economy and society. In this article, we will explore some of these hidden subsidies and understand their detrimental effects.
Hidden Subsidies in Fossil Fuels
According to a Congressional Research Service report, annual hidden subsidies for the US fossil fuel industry range from $4.6 billion to $649 billion. This disparity highlights the significant variation in hidden costs across different types of fossil fuels. While some subsidies are fairly well-known, others remain hidden, leading to a distorted view of their true economic impact.
Hidden Health Impacts
One of the most significant hidden subsidies is the impact on public health. In Texas, for instance, a recent study analyzed 13 of the state's largest coal-fired power plants and found that the air pollution from these plants often causes greater financial burdens in healthcare costs than the value of the electricity they produce. Assuming standard-sized GW capacity coal plants running at 60% capacity factor and generating 60 MW per hour, the annual electricity cost is approximately 4 billion dollars. The associated health costs, therefore, amount to approximately 300 million dollars per plant per year. These hidden subsidies for health impacts are just the tip of the iceberg.
It is important to note that while coal is particularly harmful to human health, no fossil fuel is beneficial. The impact is a ratio that depends on the specific type of fossil fuel and its environmental footprint. Natural gas, for example, produces about 1.13 tons of CO2 per MWh of electricity generated, while coal emits about 2.26 tons per MWh. The health and environmental costs from these hidden subsidies are substantial and often outweigh the value of the energy produced.
Military Support and Security Costs
Another significant hidden subsidy is the cost of securing the fossil fuel industry. The Bernie Sanders campaign pegs the cost of security for the oil and gas industry globally at around 81 billion per year, paid for by the US taxpayer. This cost is not just about protecting infrastructure but also ensuring the stability and security of supply chains. The rationale behind this spending is often to prevent the Middle East from becoming a wasteland of ash and unexploded ordnance, a scenario that would be far more detrimental both economically and politically. The cost of maintaining this stability is often underestimated when assessing the true cost of fossil fuels.
Economic Impact of Climate Change
Climate change is another hidden subsidy that disproportionately affects society. A recent study found that the median economic impact cost of CO2 emissions is $417 per ton. Even at the lowest end of the range, the cost is about $165 per ton. When we factor in the emission of CO2 from burning coal to produce 1 MWh of electricity (which produces about 2.26 tons of CO2), it is clear that there is a significant hidden subsidy associated with this practice. Similarly, burning natural gas to produce 2 MWh of electricity (roughly 2.52 tons of CO2) results in even more hidden subsidy.
Why Transition to Renewable Energy?
Given these hidden subsidies, it is imperative to replace coal and gas generation as quickly as possible with wind and solar power. Not only are wind and solar cheaper in the long run, but they also have significantly lower environmental and health impacts. According to various estimates, the cost of CO2 emissions alone can significantly increase the price of electricity generated from fossil fuels.
It's worth noting that my personal policy is to block and mute climate change deniers and other science deniers. This stance is crucial in ensuring that the discussion around these issues remains grounded in scientific facts and evidence.