Can utilities be charged for environmental costs? SCIENCE & TECHNOLOGY

November 11, 1990|By Peter Honey

JACKSON, WYO. — Jackson, Wyo.Switch on the light, and it adds maybe a penny to your bill. But how much more would it cost if you counted the damage from acid rain, global warming, urban smog, deforestation, lung ailments and all the other problems associated with the way we make the power we use?

A growing number of states are beginning to figure out the costs of pollution and environmental exploitation. They've lumped them into an ugly phrase: "environmental externalities." And over the next few years these "externalities" will begin to creep into the pockets of consumers across the country -- either as adjuncts to power bills, as hidden factors in the rates or as the prices paid for factory-made products.

A few months ago, New York became the first state to apply the principle of pollution costing -- not as an add-on to consumers' bills, but in the form of a penalty on "dirty" power stations -- the idea being to prod utilities into using cleaner forms of power generation.

Analysts believe that what happened in New York -- and what is beginning to take shape in other states, mainly in the Northeast, Northwest and Midwest -- signifies a crystallization, a coming-of-age if you like, of the environmental revolution that began a few decades ago. It means basically that pollution has become part of the bill.

It's no small bill, either. The U.S. electric power industry, with revenues of $160 billion a year, is one of the country's largest, and dirtiest, enterprises -- responsible for two-thirds of the nation's acid rain, a fifth of global greenhouse-effect gases and half the nuclear waste. More than two-thirds of power consumption relies on fossil fuels that, when burned, turn into acid-forming, health-threatening oxides of sulfur, nitrogen and climate-changing carbon dioxide.

Utilities have cut smoke emissions significantly over the past 17 years, but researchers say it will take decades to bring them down to acceptable levels.

Florentin Krause, a staff scientist at California's Lawrence Berkeley Laboratory, estimates that countries will have to reduce, or absorb through reforestation, 80 percent of current carbon dioxide emissions merely to stabilize concentrations of greenhouse gas.

International concern is rising over global warming. Last week in Geneva, a conference of 700 scientists called for immediate action by industrialized nations to reduce carbon dioxide emissions by 20 percent by the turn of the century. The United States emerged as the only developed nation to oppose a firm timetable for reductions.

While the U.S. administration refuses to tie itself to a timetable, or even in some cases to accept the validity of the latest scientific projections about man-made climate change, several states are moving ahead with their own pollution abatement projects.

Last month, more than 250 of the country's foremost energy experts -- physicists, chemists, economists, utility operators and state regulators -- gathered in Jackson, at the foot of Wyoming's Teton Mountains near Yellowstone National Park, to compare notes and discuss new directions in the power business.

The conference, arranged by the national association of state regulators, was the first gathering of its kind to concentrate solely on environmental concerns.

"Nothing in our industry is ever revolutionary," said Mary Lou Munts, Wisconsin public service commissioner. "But I think we are beginning to see major moves now" -- moves that many believe could spread ultimately throughout consumer society. What, for example, are the pollution costs of a golf ball, a vinyl seat cover, an automobile or a newspaper?

"Internalizing the environmental costs imposed on society by polluters is the wave of the future in addressing environmental degradation," said Richard Ottinger, co-director of Pace University's Center for Environmental Legal Studies, which recently published a 760-page book on environmental costing.

It is relatively easy to apply environmental costing to the power industry, because of the high level of state regulation involved.

New York, for example, was able to apply the principle because state law provides for utilities to buy electricity from independent power producing companies through a "bidding" system. The competition of rival power producers keeps prices down and allows the utility to choose the sources of the electricity they buy -- for example, coal generation, hydropower or even solar energy.

In the past, bids were chosen according to price, reliability and a range of factors that govern supply. Environmental compatibility was never a factor -- until now.

Under the New York system, a conventional coal-fired plant that offers to provide electricity at 5 cents a unit (kilowatt-hour) would be required to add an environmental cost of almost 1.5 cents.

This would effectively raise the price of coal power by 30 %J percent, possibly heightening the competitiveness of more costly, but cleaner, sources such as solar and wind.

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