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Externalized Cost Results from the Seeking Consensus Project


This article will add the externalized costs to internalized costs determined in the previous section of the Seeking Consensus project. To ensure that results accurately reflect current costs, solar and wind learning rates of 20% and 10% will be applied from the time when the internalized cost articles were published (about 3 years ago).

The individual externalized cost articles for different technologies can be accessed here: Oil, Coal, Gas, Nuclear, Hydro, Wind, Solar, Bioenergy, and Efficiency & Conservation. The externalized cost of storage (batteries, synfuels and pumped hydro or compressed air) was generally less than 5% of the internalized costs, so it will not be repeated here.


Results for the total cost of electricity are shown below (blue = internalized costs and red = externalized costs).

After externalized costs are added, efficiency becomes the clear winner with a cost of only $20/MWh due to the significant externalized benefit of avoided energy consumption. Hydro comes next with a total cost of $47/MWh. Unfortunately, both of these cheap options face obvious restrictions regarding the potential scale of future deployment.

Among the more scalable options, coal remains the cheapest (mainly because it is deployed almost exclusively in the developing world), followed by nuclear and gas. Wind and solar are close behind, with utility PV becoming cheaper than onshore wind on an overall cost basis. This is because the current low market share of PV imposes almost no externalized intermittency costs, while this cost is already significant for onshore wind. Other energy options remain too expensive for large-scale deployment.


Overall costs for heat from different energy sources are displayed below:

As before, the externalized benefit of efficiency makes it the cheapest option. Even though externalized costs more than double the cost of heat from coal, it comfortably remains the next cheapest option, followed by biomass, gas and oil. Next is solar thermal, followed by all the electricity production technologies.

Transportation fuel

The overall cost of producing fuel from the different energy sources is shown below.

Once more, efficiency emerges as the cheapest option. Transportation may be the area where the most potential for further gains from efficiency exists, so this presents a good opportunity that should be exploited through intelligent policy. Unsurprisingly, oil is easily the cheapest of the supply side options. Biofuels remain twice as expensive as oil.

Energy conservation

Energy conservation is here defined as follows: reductions in energy consumption achieved through behavioral choices that have a negligible or positive effect on the number of happy life years achieved. In other words, it involves dropping the excesses that our consumerist society tells us we need, but ultimately result in stress, excessive complexity and financial insecurity.

As shown below, conservation is in a totally different ballpark in terms of cost effectiveness. Considering the amount of wasteful excess in our consumerist culture, it also has an impressively large scope for deployment.

Conservation can be promoted in two primary ways: 1) accurately internalizing the externalized costs of all forms of consumption, and 2) accelerating the ongoing shift in culture from one chasing happiness through consumption to one striving to make a meaningful contribution to society. Hopefully we will manage to make significant progress here in the medium term future.


Feel free to point out any numbers that seem unrealistic and to suggest more accurate numbers (preferably with a linked source). If there is some consensus about a desired change, I will update the article accordingly.

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