The True Cost of Carbon

http://economix.blogs.nytimes.com/2011/05/18/the-true-cost-of-carbon/?smid=tw-nytimeseconomix&seid=auto

May 18, 2011, 12:01 AM
By DAVID LEONHARDT

Michael Greenstone and Adam Looney, economists at The Hamilton Project, are releasing a new paper Wednesday on the costs of American energy policy. They argue:

… our energy choices are based on the visible costs that appear on utility bills and at the gas pump. This system masks the social costs arising from those energy choices, including shorter lives, higher health care expenses, a changing climate, and weakened national security. As a result, we pay unnecessarily high costs for energy.

For example, Mr. Greenstone and Mr. Looney estimate that a coal plant must spend 3.2 cents to produce a kilowatt hour of electricity (and consumers then pay slightly more than this). This price appears to be a bargain, the economists write, but the true costs — once health costs, military costs and the like are taken into account — are more than twice high: 8.8 cents per kilowatt hour.

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