Published on February 27, 2014
The External Health & Environmental Costs of Electricity Generation in Minnesota February 19, 2014 Dr. Stephen Polasky | Prof. of Applied Economics University of Minnesota
Energy Efficiency Quality Assurance: Past, Present, and Future Thursday, March 6th 11:00 – 12:00 CST Dave Bohac | Director of Research Carl Nelson | Manager of Residential Programs Isaac Smith | Program Assistant • Past experience that have inform quality assurance best practices • Innovations are currently being used in the field • Future needs and opportunities for implementation Pg. 2
Meeting Utility Resource Needs with Solar: The Merits of the Aurora Solar Project Wednesday, March 19th 11:00 – 12:00 CST Betsy Engelking | Geranimo Energy Vice President Nathan Franzen | Geranimo Director of Solar • Introduction to the Aurora Solar Project that has been selected in MN • The design and technical merits of the proposed project Pg. 3
The External Health and Environmental Costs of Electricity Generation in Minnesota Dr. Stephen Polasky Applied Economics Professor University of Minnesota Pg. 4
Question & Answer Webinar Link: http://www.mncee.org/Innovation-Exchange/Resource-Center/
HEALTH & ENVIRONMENTAL COSTS OF ELECTRICITY GENERATION IN MINNESOTA Andrew L. Goodkind and Stephen Polasky
Introduction • Electricity generation contributes to air pollution with serious health and environmental impacts • Emissions include – Criteria air pollutants (SO2, NOx, VOCs…) – Greenhouse gases (CO2) • Impacts – Human health – Local/regional environmental effects – Climate change
Introduction • Why estimate the monetary value of health and environmental impacts? • Information for policy and planning – Resource planning: comparison of alternative energy sources – Resource use efficiency
Introduction • Why estimate these values now? • Minnesota Public Utility Commission uses estimates from the 1990s – Out-of-date – Not reflective of full costs
Bottom-line • Total cost: $2.454 billion annually – Central estimate of dollar value of damages to human health and the environment from electricity generation in Minnesota – $877 million from criteria air pollutants – $1.577 billion from GHG emissions • 94% of costs come from coal-fired power plants (58% of electricity from coal)
Bottom-line • Minnesota Public Utility Commission estimates of costs (“old estimate”) – Total cost between $58 and $257 million annually • Main differences – Old estimates: no damages from criteria air pollutants (“these are regulated”) – Old estimates: very low value for damages from greenhouse gas emissions
Results in context • Cost estimates have large margin of error – Central estimate of $2.454 billion annually – Range of estimates: $1.041 to $3.562 billion • Initial study not the final word
Results in context • Partial coverage of impacts • Included – Health and some environmental impacts from criteria air pollutants: SO2, NOx, PM2.5, PM10 – Climate change impacts from CO2 and other greenhouse gases • Not included – Damages from mercury emissions – Damage from VOCs, ammonia, metals – Damage to ecosystem services
METHODS TO GENERATE COST ESTIMATES
Cost estimates • Two important categories of cost – Health and environmental costs of SO2, NOx, PM2.5, PM10 – Climate change costs from CO2 and other greenhouse gases
Costs of criteria air pollutants • What are the costs from emissions of SO2, NOx, PM2.5, PM10 from Minnesota electricity generating plants? • National Academy of Sciences report: – National Research Council. 2010. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use
Costs of criteria air pollutants • Main steps in the analysis: 1. Link changes in emissions to changes in ambient concentrations of air quality 2. Link changes in air quality to various health and environmental impacts (dose-response relationships) 3. Estimates the dollar value of these impacts
Step 1: From emissions to ambient air quality • Start with data on emissions from electric generating plant sources
Total emissions of pollutants from power plants in Minnesota (2008) Pollutant SO2 Coal 77,143 Natural Gas 80 NOX 61,184 684 1,458 293 180 422,061 15.1% PM2.5 3,201 29 478 32 15 214,189 1.8% PM10 8,201 109 553 40 16 794,405 1.1% NH3 5 213 367 10 0 203,768 0.3% VOC 583 31 109 4 22 1,210,933 0.1% Lead 0.91 0.001 0.038 0.006 0.006 22.0 4.3% Mercury 0.65 0.0001 0.008 0.0004 0.002 1.47 45.1% Biomass 402 Oil 602 Source: US EPA, National Emissions Inventory . Other 25 MN All Elect. % of Emissions Total 114,177 68.5%
Step 1: From emissions to ambient air quality • Air dispersion and air chemistry model (sourcereceptor model) • Air Pollution Emissions Experiments and Policy analysis (APEEP) model (Muller and Mendelsohn 2006) • Calculate change in ambient air quality by location: – With power plant emissions with versus without to get change in ambient air quality by location
Step 2: From ambient air quality to impacts • Dose-response relationships • Major cost comes from premature mortality – 10 μg m-3 increase in PM2.5 exposure related to 6% increase in premature mortality (Pope et al. 2002) – Some other studies have found larger impacts: Lepeule et al. 2012 find a 14% increase • Areas with higher populations exposed have higher impacts (location matters)
Step 2: From ambient air quality to impacts • Other impacts – Infant mortality from PM2.5 exposure – Chronic bronchitis and loss of visibility from PM10 – Chronic asthma, acute-exposure mortality, respiratory admissions, emergency room visits for asthma, and crop and timber loss from ozone – Chronic obstructive pulmonary disease and ischemic heart disease hospital admissions from NO2 – Asthma and cardiac admissions, and material depreciation from SO2
Step 3: From impacts to dollar value of costs • Focus on cost of premature mortality • Value of statistical life (VSL): $6 million (2000 USD) – Viscusi and Aldy (2003) estimate a mean VSL of $6.2 million (2000 USD), with a 95 percent confidence interval of $2.5 – $15.7 million • Values for other impacts are small in comparison with mortality costs
Costs of SO2, NOx, PM2.5, PM10 • Combining steps 1 – 3: increased costs from an additional unit of emissions of each pollutant at each location – Marginal damage: increased cost per unit of additional emissions • Total damage estimates: – For each pollutant: multiply marginal damage by the total amount of emissions – Sum over all pollutant types
Costs of SO2, NOx, PM2.5, PM10 • Range of marginal damage based on location Pollutant Mean 5th 25th 50th 75th 95th
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