Fossil fuels pricing and implications to

September 10, Introduction In recent months the World Trade Organization WTO has seen increasing conflict over the rules for government support of the energy sector. This Insight outlines recent activity in the WTO on subsidies for both traditional fossil fuels and the renewable energy sector.

Fossil fuels pricing and implications to

Those represent the direct costs of fossil fuels; money paid out of pocket for energy from coal, natural gas, and oil.

America is at an energy crossroad. As a nation, we are dependent on fossil fuels at a time of growing demand and dwindling supply. Meanwhile, fossil fuel use continues to impose massive environmental and economic costs. Now our country must choose between paying to continue the status quo and investing in a new energy future. With the rising price of oil, security risks associated with petroleum dependence increasing, and the environmental costs of fossil fuels becoming more evident, the market is open for renewable energy to enter. Currently, fossil fuels are our nation's primary energy source, but they are a limited resource. The sharp fall in the price of oil and other fossil fuels since risks disrupting continued private investment in renewables if they becomes insufficiently profitable. The decline in oil and other fossil fuel prices presents an opportunity for governments to reduce subsidies to them.

What are fossil fuels? Fossil fuels are rock-like, gas, or liquid resources that are burned to generate power. They include coal, natural gas, and oil, and are used as an energy source in the electricity and transportation sectors.

Externalities are sometimes easy to see, such Fossil fuels pricing and implications to pollution and land degradation, and sometimes less obvious, such as the costs of asthma and cancer, or the impacts of sea level rise.

Many consequences are far removed from our daily lives and may only affect a minority or marginalized subset of the population. Costs accrue at every point of the fossil fuel supply chain. Extraction processes can generate air and water pollution, and harm local communities.

Transporting fuels from the mine or well can cause air pollution and lead to serious accidents and spills. When the fuels are burned, they emit toxins and global warming emissions.

Even the waste products are hazardous to public health and the environment. Understanding these impacts is critical for evaluating the true cost of fossil fuels—and for informing our choices around the future of energy production.

Extracting fossil fuels Photo: Shutterstock There are two main methods for removing fossil fuels from the ground: Mining is used to extract solid fossil fuels, such as coal, by digging, scraping, or otherwise exposing buried resources.

Drilling methods help extract liquid or gaseous fossil fuels that can be forced to flow to the surface, such as conventional oil and natural gas. Both processes carry serious health and environmental impacts. Coal mining Over the past several decades, there has been a gradual shift from underground coal mining to surface mining in the United States.

Surface mining, which is only effective for shallow deposits, often employs highly invasive techniques, including area strip mining and mountaintop removal. Underground mining The most obvious and severe cost of underground coal mining is the threat it poses to the health and safety of coal miners.

Fossil fuels pricing and implications to

In addition to job site accidents, coal mining can lead to chronic health disorders. Black lung disease pneumoconiosis continues to be a common ailment among coal miners.

The disease was responsible for the deaths of approximately 10, former miners between andand continues today [ 3 ]. Adverse impacts to the environment are another significant cost of underground coal mining.

Mines can collapse or gradually subside, affecting surface and subsurface water flows. Mine fires also occur, particularly in abandoned mines. And acid mine drainage at underground coal mines can be a long term environmental management issue; according to the US Environmental Protection Agency EPAif active and abandoned coal mines are not properly managed, water can sometimes flow through the mine and become highly acidic and rich in heavy metals.

The resulting drainage water is detrimental to human, plant, and animal life [ 4 ]. Surface mining Surface mining involves removing the overlaying soil to access the coal below, devastating local environments.

Mountaintop removal, a particularly destructive form of surface mining, involves stripping all trees and other vegetation from peaks and hilltops, and then blasting away hundreds of feet of the earth below with explosives. Runoff water, laden with metals, from a mountain top removal site.

The process results in both short- and long-term environmental impacts. In the short term, huge volumes of excess rock and soil are typically dumped into adjacent valleys and streams, altering their ecosystems and diverting the natural flow of streams. In the long term, coal removal sites are left with poor soil that typically only supports exotic grasses.

Fossil fuels pricing and implications to

Buried valleys are similarly slow to rebound. The EPA reports that as ofmountaintop removal coal extraction had buried nearly 2, miles of Appalachian headwater streams, some of the most biologically diverse streams in the country [ 6 ].

Surface mining can also directly impact the health and safety of surrounding communities. Mudslides, landslides, and flashfloods may become more common. And depending on the chemical makeup of the coal deposit, mines can pollute local drinking water sources with toxic chemicals like selenium, arsenic, manganese, lead, iron, and hydrogen sulfide [ 7 ].

A Harvard University study, which assessed the life cycle costs and public health effects of coal from tofound a link to lung, cardiovascular, and kidney diseases—such as diabetes and hypertension—and an elevated occurrence of low birth rate and preterm births associated with surface mining practices.

Oil and gas drilling The environmental and health costs of onshore and offshore oil and gas drilling are also significant, and often unseen.World moves closer to global pollution pricing as China launches carbon market. Putting a price on pollution can incentivise the phase-out of fossil fuels, but the existing carbon markets have so far not delivered a high enough price to drive the transition to a zero-carbon economy.

Femke de Jong, policy director at Carbon Market Watch. Dual pricing, one of the forms of government support for fossil fuel consumption most commonly discussed at the WTO, is problematic from both an environmental and trade perspective. On the environmental side of the ledger, dual pricing encourages overconsumption of fossil fuels by lowering the price consumers pay.

Today in Energy. Glossary › FAQS › In some areas of the country, abundant hydropower capacity has supplied both baseload and peaking generation. Fossil fuels—coal, natural gas, and petroleum—supplied 70% of total electric power generation in , with that share rising to 82% in , and falling back to 70% in This intuitive approach is similar to Gosolov et al.

(), who consider energy substitution across various depleting resources within a CSGE framework. 1 This paper follows more closely those of Tsur and Zamel (), who consider depleting fossil fuels competing with renewable solar energy, and Erikson (), who considers clean energy versus dirty energy and the externality implications.

Lawmakers could increase federal revenues and encourage reductions in emissions of carbon dioxide (CO 2) by establishing a carbon tax, which would either tax those emissions directly or tax fuels that release CO 2 when they are burned (fossil fuels, such as coal, oil, and natural gas).

Emissions of CO 2 and other greenhouse gases . Disadvantages of fossil fuels: Fossil fuels as the name suggests are derivatives of plant and animal fossils that are million years old. These are primarily formed from the remains of the decayed plants and animals of the carboniferous era.

The Hidden Costs of Fossil Fuels | Union of Concerned Scientists