Mortality Effects of Regulating Coal
A new study finds that regulations that would reduce the use of low-cost coal-fired power would lead to significant increases in mortality rates, particularly among the poor. The study, Mortality Reductions From Use of Low-Cost Coal-Fired Power: An Analytical Framework, by Daniel E. Klein, president and founder of Twenty-First Strategies, and Ralph L. Keeney, a research professor with the Fuqua School of Business at Duke University, notes that “It is now widely recognized that wealthier individuals are more likely to live safer, healthier, and longer lives.”
Low cost coal has been a major part of the U.S. energy supply and has brought tremendous benefits to Americans. “Indeed,” says the study, “the availability of low-cost electricity has accelerated the electrification of our energy systems, with an ever-growing share of our energy use comprised of electricity.” Any curtailment on the use of coal would force Americans to use other more expensive alternatives, most likely natural gas.
The study proposes an analytical framework for determining the effects of reducing coal use, but does not “presume any level of coal displacement of any particular policy initiative.” What it does is extrapolate the costs of reducing coal use from a series of economic studies to determine the income and employment effects of a hypothetical 100 percent displacement of coal, which are then related to health effects. These findings may then be “scaled on a linear basis to estimate the premature mortality implications of various policy initiatives.”
The study finds that fully replacing coal-fired power in the U.S. would reduce total household income by 125225 billion dollars in 2010, the peak year impact. It would also lower employment by 2.2 to 4.5 million jobs. These impacts would persist for 5 to 10 years as the economy adjusts to higher energy costs.
The relationship between loss of disposable income and mortality rates suggests that regulatory costs of $6.818.5 million lead to one additional adult death. For regulatory costs related to electricity, $8.9 million induces one additional adult death. Thus a loss of disposable income of $125225 billion in 2010 could lead to 1425 thousand additional deaths. The study also notes that these costs disproportionately affect the poor, because they spend a larger percentage of their income on electricity than wealthier individuals. Those earning less than $15,000 per year (about 16.5 percent of all households) would suffer 43 percent of the total additional deaths, while those earning over $50,000 would only incur 9 percent of the additional deaths.
The study did not estimate income-related deaths in children or unemployment-induced deaths, partly because of the possibility of double counting. “However, our extrapolations from other studies suggest substantial mortality impacts, possibly in excess of 100,000 lives,” says the study.
The study was funded by the Association of American Railroads, the Center for Energy and Economic Development, the Edison Electric Institute, the National Black Chamber of Commerce, the National Mining Association, and the National Rural Electric Cooperative Association.
Wind Powered by Tax Credits
The American Wind Energy Association (AWEA) has announced that the amount of generation capacity added in 2002 fell off significantly from 2001, due to uncertainty over the availability of a federal 1.7-cent-per-kilowatt-hour tax credit for wind farm owners and operators. The tax credit expired in December 2001 and was not renewed again until March 2002. The tax credit lapsed again in December 2002. Only 410 MW of wind power generation were installed in 2002, compared to 1700 MW in 2001.
This came as no surprise to AWEA, however, which predicted that there would be a decline in new generation unless the tax credit was kept up to date. This is not the first time that a lapse in the tax credit has had a significant impact on new installation. In 1999, installation of new generation fell to 50 MW when the tax credit was no longer available. Because wind power is not cost-competitive without the tax credit, the lapses lead to a boom-and-bust cycle for the industry.
Now, Sen. Gordon Smith (R-Ore.) has introduced a bill in Congress to extend the tax credit through Jan. 1, 2014 to allow for growth in the market. “We love it,” said Jaime Steve, AWEAs legislative director. “It gives business some stability so they can plan and gets rid of the boom-and-bust cycle in the industry.” One energy company, FPL Energy, has plans to install significant wind generating capacity this year, anywhere from 700 MW to 1200 MW. But, according to company spokesman Steven Stengel, the fate of the production tax credit will have an impact on the companys future plans.
What is not clear is why taxpayers should be funding an industry that cannot survive without their help, or why wind power should receive special treatment over its competitors. Wind power subsidies are so extensive that their value sometimes exceeds the wind farms revenues from selling electricity.
It is unlikely that the bill will succeed, however. A bill introduced last year by Rep. Mark Foley (R-Fla.) to extend the tax credit for five years went nowhere.