Top EIA Energy Trends Watcher Agrees: We Do Not Count Damage to Public Property in Price of Fossil Fuels

Posted By mikec on February 18th, 2011

We recently wrote about the insights shared by energy trends analyst Chris Namovicz of the U.S. Energy Information Administration (EIA), who spoke at our “Communicating Energy” lecture series recently, and his comments regarding the lack of a definitive count on fossil fuel subsidies in this country. Today, we return to Namovicz’s lecture, this time to ask him about the economics of fossil fuel companies’ exploitation of resources on public property.

Here’s our question:

Their price drops in part because we’re not charging them to ruin public property. I mean, we basically are letting them contaminate water, we don’t charge them for that, and they don’t have to pay it. Your assumptions don’t include any price we would impose on them for hurting public waterways, is that accurate?

Now, here’s Namovicz’s response:

I think it’s easier to figure out the costs to mitigate the issue than it is to figure out the value of mitigation…[or of the loss of an asset], right.

This answer highlights a major problem with the way we account for the costs – or, more accurately, fail to do so – of fossil fuel production in this country. Attempts at accounting for these costs have been made, and have given us an idea of the scope of what we’re dealing with. For instance, a new study by Harvard researchers estimates the costs involved in the “life cycle coal production” in the United States. The answer is staggering: “between a third and over half a trillion dollars each year in health, economic, and environmental impacts.” That includes “damages from climate change (like weather events and rising seas, public health damages from toxins released during electricity generation, deaths from rail accidents during coal transport, public health problems in coal-mining regions (in Appalachia, mountaintop removal contaminates surface and groundwater with carcinogens and heavy metals), government subsidies, and lost value of abandoned mine areas.” And that’s just coal. The same type of analysis can and should be done for oil and natural gas, as well, with what you can expect to be similarly eye-popping results.

When the dirty energy lobby makes the Palin-esque claim that it’s not really subsidized, or hardly at all, it’s OK to laugh, or admire them for working so hard to believe their own nonsense. But it’s important to point out that it’s a lie, and a big one at that. The fact is, the direct and indirect underwriting to this industry – including an almost complete failure to account for damages to public land, water, and health – has been wildly underestimated, not overestimated.

In stark contrast, clean energy doesn’t engage in wholesale wreckage of public property. We keep reading about the devastation caused by oil spills, natural gas “fracking,” mountaintop removal coal mining, etc., because we are renting our property to bad renters – people who aren’t charged a market rate, don’t give a security deposit, and who can absolutely counted on to wreck the house. Maybe a deficit-conscious country could do better.

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