The true cost of energy



coal open pit mining

Credit: Codrington, Stephen. Planet Geography 3rd Edition (2005)

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BRISBANE: Ever wondered how much your power bill would be if the price of electricity included the environmental damage it had caused?

Wonder no more: the Australian Academy of Technological Sciences and Engineering (ATSE) has released a report estimating the hidden costs of electricity generation, also called externalities.

The average wholesale price of electricity in Australia is around $40 per megawatt-hour (MWh), but that only includes costs required to produce and deliver energy - not costs caused by generating electricity, such as environmental damage and health problems.

"All power generation technologies are accompanied by social and environmental externalities, costs imposed on individuals or the community that are not paid for by the producer or consumer of electricity," says Tom Biegler, the report's author.

Environmental costs can include damaged ecosystems from mining the fuel, or climate-change-based damage from greenhouse gas emissions, and health problems include radiation from nuclear fuel or respiratory disease from fine-particle air pollution released by coal burning.

The report assigns a monetary value to each of these costs, and estimates the external costs of using brown coal at $52 per MWh, black coal at $42 per MWh, and natural gas at $19 per MWh.

Adding carbon capture and storage should bring the cost of coal-burning down to between $10 and $20 per MWh.

Renewable energy sources fare better because of their low greenhouse gas emissions: externalities of photovoltaic solar power are estimated to cost $5 per MWh, and wind power just $1.50 per MWh.

Nuclear power generation also has low greenhouse gas emissions, and the costs of mining, construction and decommissioning come to $7 per MWh.

Nuclear power also reveals one of the obstacles to valuing externalities - the difficulty of putting a dollar value on events that are extremely rare but have catastrophic consequences, such as a Chernobyl-style meltdown.


"There is currently no accepted method to include these low-frequency, high-impact 'damoclean' risks," says Ziggy Switkowski, the chair of the Australian Nuclear Science and Technology Organisation and former CEO of Telstra, who hopes that the report will re-start public debate about using nuclear power in Australia.

Another difficulty is assigning values to carbon emissions, since the problems that climate change will cause haven't happened yet and can't be measured precisely.

"Just think about all the different kinds of climate change damage that have been proposed and then try to imagine adding them all up for every part of the globe and calculating the result in terms of a cost for each tonne of gas emitted," Biegler says. "Putting dollar value onto that is a huge uncertainty."

But uncertainties don't make the exercise useless, he adds, because assigning any value to a tonne of carbon emissions allows us to see the relative differences between various power-generating technologies.

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