Ben Burge

 In this article Ben Burge tackles the true costs of our actions (coal in particular). It’s a topic he will address at the inaugural Purpose event in Sydney on 7-8 December. 

Thinking about the world’s leaders gathering in Paris to discuss the future of the planet, I was prompted to think of John Oliver’s classic interview with NSA whistleblower Edward Snowden regarding privacy and national security (first released in April 2015. You can see it here).

True to form, Oliver took an impenetrable and amorphous issue (in that case regarding liberty, privacy and security) and framed it in terms of a simple question to which all Americans can relate: “If I send an explicit image of myself to my wife via gmail, can the NSA look at my ‘junk’?” … powerful stuff indeed.

Powerful because it highlights what Americans think about this issue, which can be broadly summarised thus:

“I don’t want the government looking at my genitals. But if someone else’s genitals need to be viewed in order to protect my family, I’m okay with that. To be clear, as long as they aren’t looking at my genitals.”

Like all complex policy areas, it highlights the struggle between (i) what we want; (ii) what we can have; and (iii) what we are happy to take from others.

Like privacy and security policy, climate and energy policy is difficult for most Australians to grasp, for good reason: “Is 2°C a lot? What happens if we fail to contain temperatures to that level? Will I experience the change in suburban Australia, or is this just about coastal communities in the third world? Do we need to fix this now or can we worry about it later? What does this Paris COP thingy actually mean? … Oh bugger I’ll think about it later – I’ve got to put dinner on for the kids …”

Climate change is difficult because it’s intangible, its effects are dispersed and appear “distant”, and the contribution we make as individuals (either to the problem or the solution) feels tenuous.

This difficulty is compounded by the fact that – even among the “greenest” customers – sensitivity to “price” is huge. “I want clean energy, as long as my bills don’t go up as a result. Someone else should pay for that.”

However, this simplification ignores the health effects caused by (non-carbon) emissions associated with thermal generation. In a system in which there is no price on emissions, the argument for transition to renewable energy is distorted by the fact that fossil fuel power stations operate (and generate profits) with what is in effect a licence to make people sick, at no charge.

In a week in which ramping up tobacco taxes has come back on the radar as part of the broader tax reform debate, it is ironic that the chemical signature of the emissions from thermal generators (especially coal plant) closely resembles the chemical signature of cigarette smoke.

The fact that this cost doesn’t show up in the electricity bill (as it might if emissions were taxed) doesn’t mean that it disappears. The cost visits all of us by way of increased taxes to fund the burgeoning heath burden within the system.

So the debate on “cost” of renewables is quite simply flawed. The current version of the argument – “More renewables are good for the planet, but it will cost you money in the form of higher bills” – is based on allowing the most vulnerable families in the community to wear the cost and assuming that they become ill or die quietly without troubling the health system or the taxpayer. What is missing is the statement that “If we don’t transition to more renewables, your taxes will continue to grow (as they have done for the last few decades) in line with the expansion of the health burden caused by harmful emissions from fossil fuels”.

The real cost of coal in the Latrobe Valley

To take the Latrobe Valley in Victoria as an example, a Harvard University study revealed that the health effects of NO2, SO2 and particulate matter (especially PM2.5) from a single coal fired generator was responsible for health costs totalling approximately $100 million a year, or $8 per megawatt-hour. The Harvard study is available here.

It is worth noting that the power station in question regularly (more than 80 per cent of the time) bids for the right to sell its energy at prices below this cost. In other words, they are prepared to cause $8 of harm to others in order to receive less than $8 of benefits.

Doesn’t sound economically efficient or fair, does it?

Imagine the untold wealth that any of us could create if given (to the exclusion of others) a licence to engage in any business, even if it makes people sick (at no charge)?

At this order of magnitude, the (unspoken) annual cost of keeping polluting plants operating makes the economics of policies for plant replacement (to renewable energy) look very attractive indeed, just on the current cost to the community.

Armed with this information, how would John Oliver break down the transition to renewable energy?

While not as graphic as “Can the NSA look at my junk?” question, maybe it goes something like this:

  1. I want my power to be as cheap as possible
  2. I want my taxes to be as low as possible
  3. I don’t want the power sector to expose my kids to cigarette smoke
  4. If my kids’ get really sick, the government should support me
  5. I don’t want the power sector to expose other kids in my community to cigarette smoke, and the government should probably support them too if they get sick

Everyone wants (1), (2), (3) and (4). While people feel guilty about (5) if it brought to their attention, they are less motivated about it. The missing piece here is that you can’t have (2) and (4) without addressing (5). Ignoring (5) doesn’t improve the household budget. It just shifts the money from one bucket (power bills) to another (taxes).

So when “cost” is more correctly defined to include health burden, the transition to renewables is no longer “expensive”. In fact it is competitive with the status quo, and delivers unquantified benefits in terms of preparing the economy for an international environment in which reliance on fossil fuels will be a disadvantage.

Less than 10 years ago it was unthinkable that you would be banned from enjoying a dart with your pot down at the pub, or that levies on tobacco would be ratcheted up in order to help address the health impacts caused by the product. Yet here we are. Maybe it’s time for fossil fuels to be put under the same lamp as tobacco?

Ben Burge is chief executive of Powershop.