Download Economic and Public Health Benefits of Coal Utilization

Economic and Public Health Benefits of
Coal-Based Electric Energy
20th Annual Surface Mined Land Reclamation
Technology Transfer Seminar
Jasper, IN
December 5, 2006
Eugene M. Trisko
Attorney at Law
[email protected]
Background
• A substantial body of economic and public
health literature demonstrates linkages between
economic performance and public health
outcomes (“wealthier is healthier”).
• The availability of coal as a low-cost energy
resource stimulates the economy and creates
jobs. These economic benefits translate to
improved public health outcomes – including
lower mortality.
CEED Penn State Study
(Rose & Wei, 2006)
• Penn State University’s updated analysis
of the economic benefits of coal utilization
finds major impacts on economic output,
household income and employment.
• Penn State analyzed the “existence” value
of U.S. coal resources projected to 2015,
and two cases where coal-based electric
generation is displaced by higher-cost
energy resources.
Penn State methodology
• Penn State used an input-output model to
estimate the “multiplier” benefits of coal-based
electric generation.
• The “existence” value of coal use measures the
aggregate economic benefits of coal as a lowcost energy resource.
• Two “displacement” cases estimate the net
economic effects of replacing 33% and 66% of
coal generation with higher-cost alternatives,
taking into account the positive benefits of
investments in alternative energy supplies.
Penn State national results
(Average of low and high price scenarios, 2015)
Output
Household
income
Jobs
Existence value
of coal
$1.0 trillion
$362 billion
6.8 million
66% coal
displacement
-$371 billion
-$142 billion
-2.7 million
33% coal
displacement
-$166 billion
-$64 billion
-1.2 million
Penn State regional findings
• The output, income and job benefits of coalbased electricity are broadly dispersed across
the nation, and are not concentrated in coalproducing states.
• Displacing coal-based generation with higher
cost alternatives causes net economic losses in
all regions and in nearly every state, even when
the benefits of investments in alternative energy
sources are counted.
Public health linkage
• Research by M. Harvey Brenner, Ph.D.,
(Johns Hopkins University) for the U.S.
Congress Joint Economic Committee, the
European Commission, and CEED applied
econometric models to estimate the
premature mortality impacts of changes in
economic performance (GDP, income,
unemployment).
Brenner’s econometric research
• CEED sponsored Dr. Brenner’s update of
his 1979 and 1984 studies for the Joint
Economic Committee relating U.S.
economic performance to health outcomes.
• Key study variables include GDP per
capita, unemployment rate and the
interaction between GDP and
unemployment.
Model performance: actual vs. projected U.S. mortality
Overview of Brenner’s findings
• Brenner’s 1984 JEC study showed that a 1%
increase in the U.S. unemployment rate was
associated with a 2% increase in age-adjusted
mortality.
• 2005 study with updated model produced
comparable results.
• The upward trend in real per capita income
represents the most important factor in
decreased U.S. mortality rates since the 1960s.
Energy case study: impact of coal
displacement on mortality
• Brenner applied his updated model to
unemployment and per capita income
findings from studies of large-scale
displacement of coal (DRI 1998, Penn
State 2001).
• The 1998 DRI and 2001 Penn State
studies relied on natural gas price
assumptions of $2-5 per MMBTU, well
below current and projected gas prices.
Hypothetical 100% displacement of coal
induces 195,000 premature deaths
“The estimated additional mortality in the
year 2010, based on four different
variations of the model, ranges from an
additional 170,507 to 368,915 deaths for
the displacement of 100% of coal-based
generation. The author’s moderately
conservative estimate is based on an
annual change model at 195,308 deaths.”
Application to potential climate legislation
“This upward scaling provided the basis for
assessment of policy proposals that could
result in specific energy supply changes.
For example, the U.S. Energy Information
Administration (EIA) estimates that climate
change proposals before Congress could
lead to the displacement of 59% to 78% of
U.S. coal-based electric generation from
reference case levels.”
Key finding: 150,000 premature deaths due
to displacement of coal under S. 2028
“Given an estimated potential
displacement of 78% of U.S. coal
generation based on EIA's study of
proposed climate change initiatives, the
indicated premature mortality from
reduced income and increased
unemployment would exceed 150,000
deaths annually, absent direct and
effective mitigation programs.”
Implications …
• Brenner’s premature mortality estimates for potential
climate change legislation are an order of magnitude
greater than EPA’s estimates of the mortality benefits of
PM2.5 standards.
• These findings demonstrate the need for full
consideration of the economic and public health
consequences of legislative and regulatory initiatives
impacting energy supply choices.
• Recent shifts in natural gas prices, reflected in the 2006
Penn State study, will increase the adverse economic
and public health consequences of policies discouraging
coal use.
• State and regional climate initiatives (RGGI, California,
Illinois, etc.) should be carefully analyzed to assess the
adverse public health consequences of increased
unemployment and higher energy costs.
References
M. Harvey Brenner, Ph.D., “Health Benefits of
Low-Cost Energy: An Econometric Case Study,”
AWMA Environmental Manager, November
2005.
Adam Z. Rose, Ph.D., and Dan Wei, “Economic
Impacts of Coal Utilization and Displacement in
the Continental U.S., 2015” (Penn State
University, supported by a grant from CEED,
July 2006).