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US: the hidden costs of energy use

ELECTRIC cars offer few, if any, overall savings compared with oil-powered vehicles, according to a report on the "hidden" costs of energy production by the US National Research Council (NRC). Commissioned by the Congress, Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use puts figures on the non-climate related costs of US energy production from a range of pollutants.

These are costs that are not reflected in their energy sources' market prices and are mainly health-related damages, stemming from sulphur dioxide, nitrogen oxides, ozone and particulate matter. The authors came up with a cost of $120bn for 2005 – the latest year for which data was available – mostly related to damage caused by pollution from electricity generation and motor vehicles.

"Because these effects are not reflected in energy prices, government, businesses and consumers may not realise the full impact of their choices. When such market failures occur, a case can be made for government interventions – such as regulations, taxes or tradable permits – to address these external costs," the NRC says. Federal rules designed to speed the shift to low-sulphur diesel use, in effect since 2007, provide an example of how regulatory action can reduce energy-related damage, it says.

Some $56bn of the 2005 total costs are attributed to transportation, which is almost entirely fuelled by oil and accounts for 30% of US energy demand. However, only around a third of this cost came from running vehicles. Most came from producing and transporting the fuel.

One result is that the non-climate related damage produced by electric cars and plug-in hybrids – which source their energy from an electricity grid still dependent on coal for around half of its power – is not much different from that caused by vehicles running on conventional fuels.

The report also looks into the likely effects of energy production on climate change, but does not quantify the cost of this, given the number of variables involved. However, it does say that lifecycle analysis shows that the overall amount of greenhouse-gas (GHG) emissions from electric, gasoline, diesel and biofuel-powered vehicles also vary little at present.

Replacing the most polluting, older coal-fired power stations would help to make electric vehicles less polluting, but the situation is unlikely to change much over the next two decades unless clean-coal technologies, such as carbon capture and storage, are widely adopted, the NRC concludes.

Second-generation biofuels, using corn stover and other waste, and non-crop vegetation, promise to offer the lowest GHG emissions overall of any transport fuel, although these fuels are yet to be commercialised. At the other end of the scale, vehicles running on gasoline produced from oil extracted from Canada's oil sands, or those fuelled by diesel derived from coal, natural gas or biomass through the Fischer-Tropsch process are indentified as having the highest lifecycle GHG emissions.

The NRC also says the climate-related damage caused by each tonne of carbon emissions in 2030 will probably be 50-80% greater than that caused in 2005, because of the effects of adding to global temperatures already warmer than today's and the damage caused by acting on a larger economy.

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