Coal Really 8 Cents per kwh Including Hidden Health Costs

After years of unfunded delay, a study by the National Research Council was recently unveiled that compares the hidden costs of energy from oil, natural gas and coal, looking mostly at the health costs from air pollution.

The report was of interest to congress as it continues the battle begun in 2007 to pass climate and energy legislation that might be finally presented as soon as Earth Day, April 22.

Congress asked for the health cost comparison in kilowatt  hours, to compensate accurately for the failure of the market to include such hidden costs.

The report found an external cost of 3.2 cents per kilowatt hour –  just for health damages alone – for coal. This would almost double the real cost of coal-powered electricity.

The report quantified $120 billion in health damages in the U.S. in 2005.

These collateral damages of associated health costs are not reflected in energy prices, so government, businesses and consumers may not realize the full impact of their choices.

For example, coal-fired plants that are already running and paid off may seem cheaper to a utility than investing in new renewable energy. But when you factor in the health costs of using coal, that dirty-fuel price advantage is negated.

The climate and energy legislation being considered is looking at government intervention that would, in effect, roll these hidden health costs into the price of different fossil fuels.

Coal costs about 4.5 cents per kilowatt hour; but if the hidden health cost of 3.5 cents per kilowatt hour were to be included – by utilities needing an accurate investment price signal, for example – it’s real cost would actually be 8 cents a kilowatt hour.

In stark contrast, state-of-the-art wind power now costs about 5 cents a kilowatt hour, with the PTC reducing it 2 cents.

The report did not include an estimate of the climate and ecosystem damage of burning fossil fuels.