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Geothermal Energy Association Study Finds Large "Externality" Benefits to Geothermal Power

2 min. read

We've written repeatedly about the enormous negative "externalities" associated with fossil fuel production, processing and consumption. For instance, we interviewed Professor Michael Hendryx of West Virginia University, whose research found that "mountaintop removal mining’s economic cost to Appalachian communities totaled roughly $42 billion per year in lost health and lives."  Hendryx also co-authored a Harvard study, which found that the full “lifecycle cost” of coal to the U.S. public is actually upwards of $500 billion a year. And recently, we highlighted a study by the IMF which estimated global fossil fuel subsidies at an astounding $1.9 trillion, counting both direct subsidies and also “negative externalities from energy consumption,” in 2011 alone. The point is, the true costs of fossil fuels are not incorporated into their price, while the true benefits of clean energy are not given a proper, monetary value in the market.

With that in mind, a new study by the Geothermal Energy Association finds a great deal of "unrecognized value in the market price of geothermal power."

This analysis updates a 2005 paper published by Alyssa Kagel and Karl Gawell of Geothermal Energy  Association (GEA) in the Electricity Journal. That report explored the beneficial externalities associated with using geothermal power instead of fossil fuels by comparing emissions levels of different fuel sources. The 2005 paper found roughly 1.6 cents/kWh of unrecognized value in the market price of geothermal power. Since that time new information has become available. This analysis expands upon the methodology of the 2005 paper by taking advantage of information not available over a decade ago and by incorporating more atmospheric pollutants into the calculation. As a result, this report finds the externality benefits of producing electricity using geothermal resources, as opposed to fossil fuels to be $0.01 for natural gas, and $0.035 for coal per kWh. Additionally, GEA estimates that geothermal provides approximately $117 million in externality benefits per year to the states of Nevada and California by avoiding fossil fuel emissions.

It would be fascinating to do a thorough analysis of all fuels, with all subsidies - as well as all positive and negative "externalities" - accounted for. Our guess is that renewable energy, which is already becoming competitive with fossil fuels despite a distinctly non-level playing field, would come out looking very, very good.