Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use

This report by the National Academies examining the externalized/societal costs of energy production was originally requested by Congress  in the 2005 Energy Bill.  It offers the most thorough attempt I have seen to try to quantify the costs we incur in addition to the price we pay for energy (I have written extensively on the topic of externalized/socialized  costs in my Framework Series article on the topic of Market Failure.

One key takeaway: looking only at the non-global warming costs of electricity production from coal, society pays 3.2 cents per kWh in hidden costs in addition to the price we pay on our electric bills.  This amounts to a 3.2 cent per kWh hidden subsidy we pay for coal power, much larger than the 2.0 cent per kWh subsidy for wind power Republicans have been blocking (in the form of the wind Production Tax Credit).  Again, this does not include any analysis of the global warming costs of coal…this kind of analysis really exposes the fallacy in arguments that call for letting the market decide which energy sources win or lose, because the market in this case is failing to correctly include all of the costs of energy production, which is instead being externalized to society.


About Cyrus

Cyrus Tashakkori is Vice President at Pioneer Green Energy, a wind and solar power developer based in Austin, TX. He has an MBA and a Masters in Public Policy from the University of Texas in Austin and a Bachelor's in Science & Economics from the University of North Carolina, Asheville.
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One Response to Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use

  1. constantine says:

    This is a fascinating study, thanks for posting. What a difference it makes to have the numbers. For those interested in browsing, the NAS “report in brief” is available here:http://bit.ly/Qlp7YT and a (full) pre-publication copy is available here in pdf: http://bit.ly/RXlt93

    The summary alone is quite interesting, particularly in articulating how they translate pollution (the main thing they analyze) to “cost,” and how this calculation is exactly using market principles.

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