Hidden costs of fossil-fuel power

Sydney Morning Herald
Friday 27/3/2009 Page: 5

THE cost of Australia's cheap coal-fired electricity would more than double if the toll on human health and the volume of greenhouse gas emissions were taken into account, says a report to be launched today by the Minister for Finance, Lindsay Tanner.

The report, by the Australian Academy of Technological Sciences and Engineering, says the health cost from Australia's black coal, brown coal and natural gas power was about $2.6 billion a year. This is roughly the same as the health costs from traffic emissions in Australia's capital cities. The study found gas had by far the lowest health costs among fossil fuels.

The Hidden Costs Of Electricity examines these external costs of Australia's power by adding a world carbon price for greenhouse gas emissions and a health cost for emissions of sulphur dioxide and nitrogen oxides, which can increase respiratory disease and cardiovascular disease.

The report says the combined cost of greenhouse gas emissions and damage to people's health would add - on average and per MW hour - about $52 to the cost of brown coal power, $42 to the cost of black coal power and $19 to the cost of natural gas. The report says these are "very significant" costs, given the average wholesale price of electricity is about $40 per MW hour.

Tom Biegler, who wrote the report, said it was the first time a study of hidden power costs had been undertaken in Australia. Dr Biegler said policymakers needed to look at the external costs of the nation's power in light of the Government's carbon pollution reduction scheme to reduce greenhouse gases.

We need to know as much about them as possible", he said. "If there is a single message, it's: 'Don't forget the externalities."' The report draws on research and analysis by the European Union to estimate the monetary and environmental costs of coalfired electricity. The research by the EU found renewable and nuclear energy had far lower external costs.

Dr Biegler's report says the external costs of renewable energy in Australia are also likely to be low - about $5 per MW hour for electricity produced by solar panels and $1.50 per MW hour for wind energy. The costs would come mainly from the manufacture of the technology, not from generation.

Nuclear power also had a smaller external cost than fossil fuel power - about $7 per MW hour, largely from the construction and decommissioning of power stations. If coal-fired power stations used "clean coal" carbon capture and storage technology, their exhaust emissions could fall by about 90% . However, the volume of emissions from the technology itself were unknown.