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Consider Externalities When Discussing Alternative Energy

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Some in the fossil fuel industry, along with their ideological sympathizers both inside and outside of government, are not content with pronouncing global warming a hoax in defiance of scientific consensus. In a further unprincipled effort to ease regulatory curbs, they are opposing a governmental mandate requiring some standardized use of renewable energy, arguing that such technology is not an economically viable alternative to oil, gas, and coal for the foreseeable future.

If that false premise can be sold, a legislative mandate compelling utilities to level the playing field between fossil fuels and solar power, wind, and other relatively clean renewable energy sources will never get off the ground. Healthy competition will be stifled and the United States will invariably fall behind other nations in the transition to a modern, sustainable national energy infrastructure.

The Competitive Enterprise Institute (CEI) is a Washington-based free market think tank that frequently acts as a shill for corporate polluters. Ben Lieberman, a senior fellow at CEI, contends that without generous federal subsidies, wind could not come close to competing with coal and other fossil fuels. Lieberman estimates that absent these subsidies, wind would cost approximately 15 cents per kilowatt hour (per KWH) compared to 10 cents per KWH for coal.

What Lieberman conveniently omits are the substantial subsidies and other considerable external costs that accompany coal and are not factored into the market price. Yes, wind has its subsidies, along with storage and transmission issues and a drain on natural resources through its demand on building materials.

But the costs that coal generates and that are not incorporated into the market price dwarf the expense of producing and operating wind power. Princeton Professor Robert Williams estimates that the adverse effects from coal-related air pollution alone would add 13 cents per kilowatt hour (per KWH) to the price of coal. Were the hefty additional medical expenditures, lost work hours, and cost of pollution cleanup and prevention built into the price of coal, renewable energy would look a lot more enticing.

More than a decade ago, a senior economist at Southern California Edison Electric Company calculated that with the addition of all external costs, coal would actually be priced at 17 cents per KWH rather than the 1.8 cents per KWH at that time. He pegged wind and solar at between five and 12 cents per KWH (and renewable energy production costs have been brought down since the date of his study).

The bottom line is that the price of an energy source should reflect not just its production costs but its impact on health, natural resources, and aesthetics. Without those inclusions, fossil fuels will be enjoying an economic advantage they don't deserve.

Edward Flattaus fourth book "Green Morality" is now available.

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