Project EVIE Blog

It is a commonly held misbelief that environmental reform is contrary to economic incentive. The facts show otherwise, as evidenced in a report this week from the National Research Council, which claims that the hidden costs of US energy production and consumption amount to $120 billion per year.

The study focuses on monetizing the damage done by major air pollutants – sulfur dioxide, nitrogen oxides, ozone, and particulate matter – on human health, grain crops and timber yields, buildings, and recreation.

The $120 billion per year figure, however, does not include the economic cost of global warming, harm to ecosystems, rising food prices, and the military support needed to protect foreign oil production and transport.

The main culprits? Coal and cars.

Coal-fired electricity costs the US $62 billion per year, mostly due to the particulate matter burning coal emits. Compare that figure with $740 million per year in hidden costs for natural gas-fired electricity – that’s ~8% of coal’s hidden costs – despite the fact that coal produces 45%, and natural gas 23%, of the nation’s electricity.

Emissions from cars cost the US $56 billion per year in health and non-climate related damages. Specifically, $36 billion from light-duty vehicles, and $20 billion from heavy-duty vehicles.

According to the report, the hidden cost of operating a hybrid/electric vehicle is between 0.20 cents and 15 cents per mile, and the hidden cost of operating an ICE vehicle is between 0.34 cents and 5.04 cents. This surprisingly high hidden cost of operating a hybrid/electric vehicle is due to 1) the high environmental cost of manufacturing lithium-ion batteries, and 2) the fact that half of the nation’s electricity comes from burning coal, which, as seen above, has extremely high hidden costs.

Unfortunately, several news outlets interpreted this as proof that hybrid/EVs are less green than ICE vehicles. This is misguided, however, as it overlooks certain important facts:

Firstly, the data for the study is from 2005 – the last year such data is available for. Between 2005 and 2009, focus and investment in EV technology has rapidly expanded, and as a result, battery technology has become more efficient, and less wasteful. Barring the collapse of civilization, batteries will continue to become more efficient, and less wasteful, thus driving down their environmental cost. In the meantime, several companies, including Nissan, are starting battery-recycling ventures, which, apart from making batteries less wasteful, will help make the direct cost of owning an EV more affordable.

Emissions standards in ICE cars and light trucks, on the other hand, have only increased, on average, by about 1 mpg in the last 4 years, and by 6 mpg over the last 20 years. Improving fuel efficiency in ICE cars is much more technologically restrictive than improving battery efficiency in EVs. More or less, the only way to improve fuel efficiency in ICE cars is to build them lighter, with smaller, less powerful engines – and even then the gains are limited.

Secondly, the cited hidden costs of hybrids/EVs (between 0.20 cents and 15 cents per mile) include both hybrids, which consume petroleum, and EVs, which do not. It does not price out each one separately.

Thirdly, the high hidden costs of EVs is attributed to the fact that it runs on electricity, and that in the US, half of all electricity is produced from firing coal, an extremely pollutive process high in hidden costs. However, electricity is electricity, it doesn’t have to be produced from firing coal – it can be produced from a wide range of zero-emission and renewable sources, such as wind, solar, hydro, and even nuclear power. Thus the hidden costs of powering EVs can be drastically reduced by decreasing dependence on fossil fuels and increasing reliance on clean energy.

ICE cars, on the other hand, are not so lucky. They run on one thing, and one thing alone: gasoline. There is no replacement for it, it cannot be recycled, and is only renewable on a cycle of about two million years. And, as global oil production reaches its peak, oil companies will be forced to extract more and more oil from hard-to-reach and technically complex areas, in which it takes a significantly higher input of energy just to get the oil out. The same is the case with so-called ‘unconventional’ oil reserves – such as oil sands, oil shales, and coal-based liquid supplies – which oil companies will be also be forced to turn to as ‘conventional’ oil reserves run out.

Therefore, while by switching to clean energy use, the hidden costs of EVs can be greatly reduced, the hidden costs of ICE cars will only escalate in the future, as oil production becomes growingly energy intensive and wasteful.

In light of this data, environmental action can be understood not as an issue about ideas – about how it’s morally ‘right’ to be green and protect the planet – but about economics. Even if you don’t give a rat’s ass about global warming, green grass, blue skies, seeing stars at night, or saving little bird species, it makes sense economically, for the country, and for the individual taxpayer – who’s money’s being spent supporting these hidden costs – to champion clean energy initiatives.

There’s a lot of talk right now about cutting health care costs, but at the same time being fiscally conservative. It seems that if you’re for these two things, it’s completely illogical not to stand behind clean energy initiatives. By cutting air pollution, investment in clean energy would bring down health care costs, and, also save the government and the taxpayer billions of dollars by reducing the hidden costs incurred by our current energy policy on grain crops, timber yields, buildings, and recreation.

With in excess of $120 billion to be saved every year (as that number does not reflect the economic cost of global warming, harm to ecosystems, rising food prices, and the military support needed to protect foreign oil production and transport), it seems almost certain the economic benefits would outweigh the cost. Oh, and it wouldn’t be bad for the planet either.