The True Cost of Fossil Fuels

Skeptics of clean energy often cite high costs and “the need for subsidies” as a reason we shouldn’t or can’t afford to transition away from fossil fuels. But dirty energy has many costs attached to it which are not always readily apparent. Fossil fuel prices can be volatile, and we don’t always use domestically sourced products. Aside from the actual cost to consumers, the fossil fuel industry also receives subsidies, and we pay indirectly for using polluting energy sources in healthcare and pollution cleanup costs. It’s well past time to reframe the conversation around energy costs, and to even the playing field for cleaner energy sources.

While it’s true that most renewable energy sources can have high startup costs, once they’re running they’re inexpensive to keep up – after all, you don’t have to pay for wind or sunshine. In comparison, using fossil fuels for energy means we have to constantly buy oil, gas, and coal at the market rate. And this money doesn’t always stay in the US economy: “In 2007, America spent more than $360 billion importing fossil fuels, with the vast majority of that money spent on crude oil. That money is a direct transfer of wealth from American consumers to oil companies and foreign governments.” Even when we are buying within the country, volatile fuel prices can negatively impact consumers.  In comparison, prices for electricity generated from renewable sources has been shown to be more predictable.  In 2016, we spent $5.6 billion on renewable energy incentives, most of which went to biofuels.  Studies attempting to put a number on subsidies supporting fossil fuels, not including subsidies for things like fuel assistance programs, pegged them at around $20 billion dollars a year including the federal and state levels. The US has been slow to get rid of these subsidies and tax breaks compared to other developed countries, and that’s no coincidence. “In the 2015-2016 election cycle, oil, gas, and coal companies spent $354 million in campaign contributions and lobbying and received $29.4 billion in federal subsidies in total over those same years.” We are already spending a lot to prop up fossil fuels, but it’s taken for granted and doesn’t get much coverage, while any changes to incentives for clean energy are often hotly debated.

While the concrete costs to buy and subsidize fossil fuels are important to look at, arguably more important are the added costs of things like health care for asthma and cancer, cleaning up pollution, and fallout from a changing climate. These are difficult to put a price on, but we do know some of the costs. For example, the BP Deepwater oil spill costed tax payers fifteen point three billion dollars. There has also been impact on agriculture: “A 2007 study by researchers at the Lawrence Livermore National Laboratory and the Carnegie Institution at Stanford University found that global production of three of the six largest global crops experienced significant losses due to global warming between 1981 and 2002. The study concluded that global wheat growers, for example, lost $2.6 billion and global corn growers lost $1.2 billion in 2002 alone.” Projections are that these costs will sky rocket if climate change is not mitigated.

The price we pay for healthcare on pollution-related illness is difficult to pinpoint, but we do have some studies that have attempted to put a number on it. Sarah Rizk* and Ben Machol of the Clean Energy and Climate Change Office, U.S. EPA Region 9, in San Francisco published a peer reviewed article attempting to put a concrete price per kilowatt hour that we pay in healthcare. They found costs of “…19 to 45 cents per kilowatt-hour for coal, 8 to 19 cents per kilowatt-hour for oil, and 1 to 2 cents per kilowatt-hour for natural gas. “For coal and oil,” Rizk and Machol write, “these costs are larger than the typical retail price of electricity, demonstrating the magnitude of the externality.” This cost isn’t distributed evenly, either – places that are the site of extraction and energy generation pay a higher price in their health.

Clean energy is often dismissed as being too expensive, but really the cost of energy from fossil fuel is artificially low and much of what we pay is hidden or part of the status quo. When you really dig into the numbers, it’s clear that the playing field is uneven. There are many reasons to transition to clean energy, and now we can add the comparative cost of it to the list.

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