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Coal's Fantasy Island: Carbon Pollution its "One and Only"

coal and carbon pollution

Laurie Johnson, Chief Economist, Climate and Clean Air Program, Washington, DC

A front-page story in the New York Times (January 23, 2014) recently highlighted increasing concerns companies like Coca-Cola, Nike, and other major corporations are having about the growing threat of climate change to their bottom line. Corporate executives and business leaders are seeing droughts, crop shortages, extreme weather and other effects of carbon pollution affect their supply chains, resources, and financial risk. 

Unfortunately, the coal industry didn’t get the memo that carbon pollution is a problem. This week, a coal-industry front group released an embarrassingly bad report claiming that carbon pollution will benefit society. The report from the American Coalition for Clean Coal Electricity (ACCCE) is an attempt to rebut the federal government’s “social cost of carbon,” which estimates the damages to our health and economy from each ton of carbon pollution.

Here’s the “analysis” in a nutshell:

  • Assume that all past wealth was created by energy and the CO2 pollution that went along with it (a very silly assumption, more below)
  • Assume that this must also be true today and going forward
  • From this, assume that total global GDP/total global tons of emitted CO2 = benefit per ton of CO2 = a supposed benefit of $2,400 per ton of CO2 emitted in 2010
  • Compare this to the government’s carbon pollution damage estimate of $33 per ton CO2 (the “social cost of carbon,” or SCC) in 2010
  • Claim that you have now shown that reducing one ton of CO2 emitted from coal combustion will reduce your income by $2,400, for only $33 in reduced climate damages

 Yes, you read and interpreted that correctly:

  • ACCCE is claiming that we can only get $2,400 worth of economic growth if we emit a ton of CO2. Cleaner competitive alternatives do not exist.
  • ACCCE is claiming that only one thing creates wealth in our society: energy. Apparently other natural resources (e.g. land, water, minerals, etc.), science, entrepreneurialism, labor, and innovation are irrelevant…not to mention a stable climate.

The coal industry ignores the fact that the transition from dirty to clean sources of energy is cost-effective today, even as clean energy technology costs radically decline. We can reduce carbon pollution with energy efficiency and harness renewable energy like wind and solar. ACCCE presents a false choice; there is no reason we can’t capture the benefits of (cleaner) energy and a concomitant growing GDP while also limiting carbon pollution.

And is it only energy that has made us rich?

Page 1 of introductory economics textbooks teach us that there are three basic factors of production needed to create wealth: land, labor, and capital. ACCCE takes one subcomponent of this formula, “energy,” from our stock of natural capital, and claims it is the source of all wealth. In so doing, it ignores the fact that the ever-increasing stock of man-made capital accumulated over time also relied upon these three main factors of production.

ACCCE’s neglect of basic production theory allows it to deny that carbon pollution threatens every component of our health and economy —from land (e.g. drought, flooding, and fire impacts on its quality), to man-made capital (e.g. extreme weather’s impact on residential and commercial buildings; on energy, water, and transportation infrastructure), to labor (e.g. pollution and extreme weather impacts on workers’ health, productivity, and availability), to natural capital (e.g. drought, flooding, and extreme weather impacts on water supply).

In other words, carbon pollution threatens the entire stock of wealth accumulated over the industrial revolution, and every input to production. Losses are real and mounting: in 2012 alone, floods, crop damage, drought, wildfires and other climate-related disasters cost our country $140 billion, with about $100 billion covered by U.S. taxpayers. The damages will increase for our children and grandchildren if we don’t limit carbon pollution today.

Did we use fossil fuels to create wealth in the past? Yes, but that’s entirely beside the point. CO2-emitting fuels were indeed used to create the wealth we have today. But now the resulting accumulation of carbon pollution in the atmosphere is creating an increasingly unstable climate that threatens to ruin it all. We have alternative sources of energy. We would be crazy not to deploy as many as we can of them.

The New York Times got the overall story right by quoting companies like Coca-Cola who are dealing with the real costs of climate change—not ACCCE’s fantastical world of carbon pollution benefits—as they try to obtain clean water and other ingredients for their products.

Still, even as a foil for more realistic industry voices, the Times should look more carefully at the source and analysis before giving a platform to ACCCE’s crazy claims. ACCCE is an association funded by coal mining companies like Peabody and coal-burning utilities like AEP and Southern Company–all of their reports tend to deny carbon pollution is a problem. But it is impossible to make this argument in any credible or ethically responsible way—analyses aimed at doing so should be regarded as highly suspicious and carefully vetted before given any voice.

Photo Credit: Coal and Carbon Pollution/shutterstock

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