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The real cost of fossil fuels

The real cost
of fossil fuels

Our continued reliance on fossil fuels is already having a devastating effect on the environment. From rising global temperatures to melting ice caps and the increasing prevalence of extreme weather events, climate change is not only a scientifically established fact, it’s now something we can see in the world around us.

But if the environmental effects of fossil fuels are clear to see, what about the less obvious impact? The toll it is taking on public health, on social equality, on global security? Looking further ahead, how can we reduce these costs and create a sustainable future?

These are the questions this report will attempt to answer.

Even if the story of fossil fuels and their impact on the world is, by now, well known, some truths are always worth revisiting.

In 2014, the United States Environment Protection Agency (EPA) estimated that a quarter of all global greenhouse gas emissions came directly from burning fossil fuels. A further 10% was attributed to emissions from the energy supply chain, such as extraction, refining, processing and transporting fuel.

Source: epa.gov

Greenhouse gas emissions

  • Carbon Dioxide (industrial) 65%
  • Carbon Dioxide (forestry) 11%
  • Methane 16%
  • Nitrous Oxide 6%
  • F-gasses 2%
  • Electricity and heat production 25%
  • Agriculture, Forestry, land use 24%
  • Buildings 6%
  • Transportations 14%
  • Industry 21%
  • Other Energy 10%

Source: IPCC (2014)

A report by the International Energy Agency (IEA) showed that in 2015 more than four-fifths of the world’s primary energy – the energy that goes directly into the energy supply system - was still supplied by fossil fuel with coal usage increasing as a proportion of total supply since 1973.

Total primary energy supply by fuel

fuel types

  • Other
  • Biofuels and waste
  • Hydro
  • Nuclear
  • Natural gas
  • Oil
  • Coal

Source: iea.org

The whole energy and consumption system is super wasteful as we have never put a value on a resource with our throw away society and consumption models. Really smart economies need to start to understand that the loss of value – never mind the damage of the wasted carbon - is criminal.
Laura Sandys
Challenging Ideas

This level of emissions is not sustainable, desirable, or necessary. The good news is, progress has already been made.

The IEA shows that an incredible 94% of primary energy came from fossil fuels in 1973. In 2017, the UK achieved its first coal-free day of energy consumption since the industrial revolution. And data from the Netherlands Environmental Assessment Agency (NEAA) released in September 2017 showed that global emissions of carbon dioxide – one of the main contributors to global warming – remained static in 2016, despite a rapidly growing global economy. All of the world’s biggest economies, with the exception of India, had falling or static carbon emissions, largely due to increased use of renewable energy.

The opportunity of renewable energy is that it will reduce inequality, both between nations and within them. It is much harder to have concentrated control of renewable energy sources by individuals; if energy is more democratically owned, both within and across countries, that reduces a huge source of inequality and poverty.
Ed Davey
Former UK Energy Secretary

Switching to more renewable forms of energy will not only mitigate against the environmental impact of climate change, it will also address some of the social and financial inequalities that come in its wake.

Climate change itself has inequality at its heart. The world’s poorest are the ones affected most by the impacts... Miami is going to suffer in the same way that low-lying Bangladesh is going to suffer, but the people of Miami, the government of the USA and the corporations there have more resources available to protect those people. So the world’s poorest suffer most from climate change.
Gareth Redmond-King
Head of Climate & Energy, WWF

Emissions, air quality
and public health

Globally, poor air quality is estimated to kill around 6.5 million people every year. An additional 4 million deaths each year are from illnesses attributable to household air pollution, according to the World Health Organisation (WHO). Many of these deaths, from illnesses such as pneumonia, stroke or heart disease, come about because of the use of dirty fuels for cooking in confined spaces.

Unsurprisingly, the problem of both domestic and industrial air pollution disproportionately affects poorer countries. But it would be wrong to believe that developed nations such as the UK escape unscathed.

In fact, an influential report from the Royal College of Physicians (RCP) last year found that 40,000 UK deaths could be attributed to exposure to outdoor air pollution every year, with 9,500 of these in London alone.

As the RCP report points out, the scourge of poor air quality is heightened for society’s most vulnerable and those living in the most deprived communities. The gap between life expectancies for the most and least affluent communities in the UK is 10 years, with air pollution cited by the report as a contributing factor.

This view is supported by David Pencheon, the director of the NHS’s Sustainable Development Unit: They will most affect the least able to cope with it. If you live in a poor part of London and you walk your kids to school, they will be breathing in a significant amount of NO2. Those in poorer areas breathe in more: east London is more polluted than west London, for example.

According to Simon Birkett of the Clean Air in London campaign, while the number of deaths directly attributable to air pollution is one thing, millions more have their health impacted over the course of their lifetimes.

What’s different with air pollution is that it affects everyone to some extent.
David Pencheon
NHS’s Sustainable Development Unit
The scientists are as certain [about the] number of deaths [from air pollution] as they are of the health effects of smoking. There is no doubt about the risk. But there won’t be 40,000 death certificates saying ‘air pollution’ in the same way you don’t get any death certificates saying ‘smoking’ or ‘alcoholism’. Because about 85% of those causes of death are cardiovascular, you could say that everyone who dies of a heart attack or a stroke actually dies an additional two years early on average.

Simon Birkett - Clean Air in London campaign

Birkett believes that previous efforts to solve the problem of greenhouse gases have harmed local air quality.

In the 1950s, the government and the scientists thought that air pollution was a respiratory problem. Even up to 2000, people didn’t understand how there could be a cardiovascular effect from air pollution. People had focused on visible respiratory effects from visible pollution. There have been some catastrophic decisions which come from a lack of understanding of the problem.
Simon Birkett
Clean Air in London campaign
© Simon Birkett and Headshot London 2017

The Harvard Six City Study

Historically, part of the problem has been that it was often hard to gauge the direct effects of harmful emissions on the population of major cities. However, a landmark study looking at smaller towns in America provides better evidence.

Harvard University’s Six City study documented air pollution and the effect on public health and mortality in six cities across the United States for a 20-year period from 1974, including the town of Steubenville in Ohio’s industrial heartland.

Steubenville was once home to two steel mills and – notoriously – the worst air in the US.

What researchers found was that the mortality rate was 26% higher in Steubenville than in the least polluted of the six cities.

This study was groundbreaking for a number of reasons. For the first time, ill health and premature death were linked to the presence of some of the smallest polluting particles, known as PM2.5, which had not been legislated against in the 1970 US Clean Air Act, passed four years before the start of the study.

It was totally unexpected that air pollution, and at these modest levels, was having such a dramatic effect, Douglas Dockery, one of the researchers, later said. “That really changed the whole discussion.

What also caught people’s attention was that the cause of deaths from air pollution were not solely from respiratory disease, as expected, but strokes, heart attacks and other coronary conditions.

We were surprised by this very strong unexpected effect on mortality, added Dockery. There’d been lots of papers on respiratory illness and asthma and chronic obstructive pulmonary disease and lung function and so forth, but it was the mortality paper that got the most attention and really galvanized the political debate.

Source: nejm.org

The ‘transport problem’

Since 2000, the UK has been reducing its carbon emissions at a faster rate than any G20 country according to PwC’s ‘Low Carbon Economy Index’. That might seem like good news, but carbon is only part of the problem when it comes to harmful emissions.

Roads in parts of London have experienced the highest levels of nitrogen dioxide pollution of anywhere on the planet. Much of this is caused by the high level of diesel traffic from buses and taxis.

While many sources of emissions, such as petrol vehicles and traditional power generators, are on the wane in the UK, others are not. In 2015, the Committee on Climate Change found that transport was almost as big an emitter of greenhouse gases as the power sector. In all likelihood, with power generation increasingly reliant on renewables, it will become the biggest emitter in the very near future.

Jim Skea, a professor at the Centre for Environmental Policy at Imperial College London, agrees that the transport industry is perhaps the biggest obstacle when it comes to dealing with air pollution. As he puts it: Clean air is primarily a transport problem.

For Ed Davey, only an attitudinal shift will make a difference. The problem is our way of life, he explains. Everyone benefits from motor transport. We’re a fossil fuel society. Everything is linked to that. We’ve got to move from where we are now to where we need to be.

Source: theccc.org.uk

The financial impact
of fossil fuels

Analysing the true financial impact of our reliance on fossil fuels is an almost impossible task. Yet there is general agreement that climate change will have a net financial cost.

Used in a number of countries, including the US, the Social Cost of Carbon (SCC) – sometimes described as the most important number you’ve never heard of – is an attempt to quantify this cost. However, there have been enormous discrepancies in the SCC over the years and little agreement on how accurate the figure can be, given the number of unknowns in its calculation.

In 2002, for example, the SCC was $70 per tonne of carbon, while last year it was said to be $40 per tonne. Gernot Wagner from the Harvard School of Engineering told the Carbon Brief website that the figure was a low estimate precisely because of the uncertainties around climate change: It is the not knowing that makes climate change so costly. Most of what we do know points in one direction, and that is that $40 is actually too low.

Simon Evans from the Carbon Brief argues that the SCC does not actually help bring home the true cost of the continued use of carbon-based energy.

The SCC numbers are an ineffective tool if you’re seeking to explain to people what the cost of inaction on climate change is, he says. I don’t think telling people that the cost is $70 a tonne or $100 a tonne means much to the public. I think people are aware that climate change is a problem but there is a disconnect between that and what people are willing to pay for.

The increasing prevalence of extreme weather events has sharpened the focus on assessing the financial cost of our use of fossil fuels. As recently as September 2017 the Universal Ecological Fund released a report estimating that climate change as a whole was impacting the US economy by an average of $240bn a year, or 40% of its current economic growth.

Simply, the more fossil fuels we burn, the faster the climate continues to change and cost. Thus, transitioning to a low-carbon economy is essential for economic growth, said Robert Watson, one of the report’s authors.

In the UK, attempts to quantify the cost to various public services of a number of related issues, whether greenhouse emissions or pollution or energy efficiency, have also historically proved difficult.

In its ‘Every Breath We Take’ report, released last year, the RCP argues strongly for a better assessment of the economic impact of air pollution.

We need further research into the economic impact of air pollution, and the potential economic benefits of well-designed policies to tackle it, states the report.

In terms of energy efficiency, there have also been piecemeal efforts to calculate the cost in financial terms. Age UK, for example, estimates that fuel poverty costs the NHS £1.3bn every year, but the overall cost to the public purse could be far greater still.

The geopolitical
cost of fossil fuels

Perhaps the biggest global cost of the world’s reliance on fossil fuels – in particular oil – over recent decades has been in the prevalence of conflict in and near areas of production.

Ed Davey, who was the UK’s Energy Secretary for three years between 2012 and 2015, is a passionate advocate of renewable energy. He believes that dramatically reducing the use of fossil fuels will not only have far-reaching environmental effects, but will also be a huge step towards addressing political, economic and social inequalities on the global stage.

People aren’t aware of the costs of the carbon economy in a broader economic and social sense. We’re aware of the effects of greenhouse gases and carbon, but the overall fossil fuel industry has some challenges for the world that if we move away from them will go away.
Ed Davey
Former UK Energy Secretary

The most obvious one is global security, by which I mean military issues. The cost of the geopolitics of energy, in terms of military expenditure, conflict and loss of life, is never properly understood.

The supply of oil and gas are not equally distributed across nations and people; they are concentrated in the hands of a small number of countries and in some of those countries they are concentrated in the hands of a small number of people and firms; and that concentration of economic power has implications for our whole world, because our whole world is built on fossil fuels.

The Middle East has been such a cauldron of conflict partly because of the control of oil. It’s one of the reasons there has been so much unrest and conflict.

The impact of the colossal energy power of Russia is also far more significant than many people understand.

According to Davey, a world that uses predominantly renewable energy will not only have less conflict but will produce less inequality and lift billions of people out of poverty.

One of the things I find most exciting about a decarbonisation agenda is renewables almost by definition tend to be more locally supplied.

We don’t know the final decarbonised solution because it may not be that heat and transport are decarbonised in the same way as electricity. But if you have a global pool of decarbonised electricity, it feels like a more secure world.

If energy is more democratically owned, both within and across countries, that reduces a huge source of inequality and poverty. Solar in particular can bring electricity to the poorest parts of the world. In rural India, there are 300m people without electricity at all, another 400m with sporadic supply. There are parts of China and huge parts of Africa and Latin America that aren’t electrified. If you can bring power without huge amounts of gridlines and all that infrastructure, that means our ability to bring power to the poorest is dramatically increased. The impact on development would be dramatic.

A June 2017 paper from academics at Harvard, the Norwegian Institute of International Affairs and Columbia Center on Global Energy Policy paints a more mixed picture of a world that has switched from fossil fuels to renewable energy production.

It warns of a new battle for resources, technology and investment, and the possibility of increased tension between the developing and developed world.

However, it concludes that there are reasons to believe that at least in the long term, a global energy system dominated by renewable energy will be more stable, peaceful and just than one dominated by fossil fuels and nuclear technology.

The renewable
future

As previously mentioned, PwC’s Low Carbon Economy Index suggests things are moving in the right direction when it comes to the most industrialised nations and their attempts to limit global warming.

Renewable energy use is on the rise and – with huge investment from China in particular as a catalyst – is becoming cheaper much more rapidly than had been predicted even relatively recently.

In the UK, the recent auction price for new offshore wind farms were far below what the market had anticipated, making wind power cheaper than both nuclear and gas.

In its 2015 General Election manifesto, Davey’s Liberal Democrat party pledged to make Britain ‘zero carbon’ by 2050. In the current climate, he says that ambition may even be too safe: It is more realistic than I thought when we first suggested it. At some stage we may be looking at bringing that date forward.

However, as the increasing levels of harmful emissions on the UK’s streets shows, dealing with energy production is only half of the battle. There are still a large number of industries that are a long way from carbon neutral, in particular the food and aviation industries. But to limit the harm that these sectors do would take a significant shift in people’s lifestyles.

And even if the UK, for example, is doing well in terms of decarbonisation, it and other nations needs to ensure that policy is in place to maintain momentum.

The most important things are the most difficult. If we were really serious about this [decarbonisation] we would tax airline fuel. People need to know that their cheap flights come at a significant cost to people with no voice.
David Pencheon
NHS’s Sustainable Development Unit

The UK so far is slightly ahead of the curve of where it’s meant to be on carbon targets, says Simon Evans of The Carbon Brief. But the Committee on Climate Change has said it won’t meet its targets in the 2020s and 2030s unless it has stronger policies in place. We’re doing OK now but we know we are off track for the future.

It isn’t a question of if, but of how fast we can transform our energy infrastructure from polluting fossil fuels to clean, decentralised renewables, and across the arts action is accelerating. From clean energy supply to sustainable buildings, pro-divestment and anti-fossil fuel campaigns, artists making work and arts funders requiring action, culture is embracing the new economy that puts sustainability at its heart.
Alison Tickell
Julie's Bicycle

Evans says we shouldn’t kid ourselves about climate change being the number one priority for governments but instead says the economic arguments have to stack up before we can enter the renewable future.

Jim Skea argues that “lifestyle change” and further drops in the price of renewable energy will have more impact than individual policies or multilateral targets, such as those set by 2015’s Paris Agreement.

If we’re looking decades and decades into the 21st century, how people live and behave in terms of energy consumption will be a crucial factor.

But for Davey, taking the power to change things out of the hands of government should be seen as a positive move: If it were just up to governments by themselves, then God help us!

Every part of society needs to be involved in finding a solution to climate change, whether it’s our grandparents or our children. Really, I think the people who have the best chance are the people who haven’t been part of what we did before. The people who are studying today to find the solutions for tomorrow. [We need to] make sure we meld engineering, physics, communications and marketing, because it’s not just about one solution or another. It’s about thinking across the board holistically and coming up with new thoughts about what we can really do as society going forwards.
Juliet Davenport
CEO and Founder of Good Energy

For more information about how Good Energy is helping to tackle climate change, visit our blog.