One key issue missing from a recent Dot Earth blog post on the carbon commitment from electricity investments
Yesterday Andy Revkin posted a very useful discussion among high level experts about the issue of “climate commitment”, as discussed in a recent article in Environmental Research Letters by Davis and Socolow. Both the blog post and the journal article are worth a read to get a sense for the complexities associated with displacing fossil fuels globally, particularly in the developing world.
The “carbon commitment” is a logical result of the growing focus on cumulative emissions and is a helpful heuristic to help people think longer term about the climate implications of our energy investment decisions. For historical context on the evolution of thinking that led us to this point, see my 2013 article in Environmental Research Letters (Koomey 2013) and the associated blog post.
The issue that I didn’t see raised in the responses so far is whether coal fired electricity is actually a net benefit to society after you correctly account for the external costs associated with such generation. I visited Beijing in February 2014 during what was the worst week so far for air pollution (perhaps it’s exceeded those levels since, I don’t know) and having 30 million people living in such conditions is horrifying. The official GDP statistics are perverse in that they count visits to the doctor from air pollution related illnesses as something that adds to GDP, but ignores the actual costs to the society in lost productivity and lost life.
The economic literature on this for the US is quite clear: Coal fired electricity delivers negative net value added. This was the conclusion of Muller et al. 2011 writing in the American Economic Review, and this result is strongly supported by Epstein et al. 2011 in the Annals of the New York Academy of Sciences. What has been less well studied is the economics of coal fired electricity in developing countries. In those countries the coal is often dirtier and the pollution controls mostly nonexistent, but the population is at a point in their economic development where energy is quite valuable, so I don’t think one can say a priori whether the US results would also apply to those countries. I think we CAN say with certainty that the actual GDP growth rate for China and other countries with comparable air pollution is much lower than what the official statistics state, because these external costs are not currently being counted.
Discussion of the carbon commitment article really must acknowledge the importance of these external costs. Some of the commenters implicitly assumed that coal fired electricity delivered net benefits for developing countries, and that’s not necessarily true, given what we know about the costs of coal pollution to society in the developed world. We do need additional studies of those costs in developing countries, but anyone who’s traveled recently in coal-dependent places knows that those external costs are large and mostly uncounted, and without a doubt would reduce the GDP growth reported by those countries if they were properly internalized.
Coal is not cheap when you count the pollution costs, and debates like these need to reflect that reality. Use hashtag #coalisnotcheap whenever you tweet about articles online about coal’s external costs, so it will be easy to compile those stories in the future.
Epstein, Paul R., Jonathan J. Buonocore, Kevin Eckerle, Michael Hendryx, Benjamin M. Stout Iii, Richard Heinberg, Richard W. Clapp, Beverly May, Nancy L. Reinhart, Melissa M. Ahern, Samir K. Doshi, and Leslie Glustrom. 2011. “Full cost accounting for the life cycle of coal.” Annals of the New York Academy of Sciences. vol. 1219, no. 1. February 17. pp. 73-98. [http://dx.doi.org/10.1111/j.1749-6632.2010.05890.x])
Koomey, Jonathan. 2013. “Moving Beyond Benefit-Cost Analysis of Climate Change.” Environmental Research Letters. vol. 8, no. 041005. December 2. [http://iopscience.iop.org/1748-9326/8/4/041005/].
Muller, Nicholas Z., Robert Mendelsohn, and William Nordhaus. 2011. “Environmental Accounting for Pollution in the United States Economy.” American Economic Review vol. 101, no. 5. August. pp. 1649–1675. [https://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649]