Energy production and use in America could be adding as much as $120 billion in hidden costs to the nation, according to a report released Monday by the U.S. Department of the Treasury and the National Academy of Sciences.

The report, "Hidden costs of Energy: Unpriced Consequences of Energy Production and Use," ties much of the hidden costs to medical care sought by people affected by air pollution from electricity generation and vehicle transportation. Sustainability advocates say for the first time, the government has recognized and quantified what economists call the "external," life-cycle costs of, among other things, electricity generation, transportation, and building heating and cooling. Together these three areas account for 90 percent of the energy consumed in the United States.
The report is expected to generate plenty of reaction from energy producers and the cleantech industry. It will likely be derided by the energy community's worst polluting energy sources, such as the coal industry, while renewable energy advocates are likely to use its findings in the upcoming debate over climate and energy legislation, even though the report does not deal with costs associated with climate change or damage to ecosystems.

Speaking from his office, Dan Greenbaum, the president of the Health Effects Institute in Boston, which studies air pollution and health and contributed to the study, said that the report "does not make recommendations, but serves as a basis upon which policy makers can make decisions."

Cleantech supporters have long-held that sources such as coal have never fully accounted for the toll they have taken on the environment and on public health. But hard numbers about such costs have been difficult to come by. This report might change that. "This is the most systematic and comprehensive look at the external costs of producing energy across all the major uses of energy," Greenbaum said.

Using figures from 2005 (the most recent available), the report estimates that about $62 billion in damage has been caused by 406 coal-fired electricity plants, which generate more than half the electricity in the U.S.

Going into detail, the report said that the external life-cycle costs of burning coal to produce electricity requires adding 3.2 cents for every kilowatt hour of energy produced. Natural gas was far cleaner, according to the report. A sample of nearly 500 natural gas plants produced $740 million in total nonclimate related damages, or an average of 0.16 cents per kilowatt hour of energy produced.

Transportation produced an estimated $56 billion in health related costs. The report looked at many different types of vehicles and fuels over their full life cycles, and in most cases, damages per vehicle ranged between 1.2 cents to about 1.7 cents per mile traveled. Electric cars and plug-in hybrid vehicles weren't as clean as supporters might have supposed either. First, it takes an electric power plant to charge the electric vehicles-- and most of those power plants are coal-burning. And secondly, because manufacturing the batteries for the cars generates significant externalized costs.

The report also estimated the life cycle costs of wind, solar, biomass and nuclear power, but it found that they were negligible compared to power generated from fossil fuels. However the report raised questions, as many critics have observed, about the risks and expense of storing nuclear waste.

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