Economic and Public Health Benefits of Coal-Based Electric Energy

1. Economic and Public Health Benefits of Coal-Based Electric Energy 20th Annual Surface Mined Land Reclamation Technology Transfer Seminar Jasper, IN December 5, 2006 Eugene M. Trisko Attorney at Law emtrisko@earthlink.net

2. Background • A substantial body of economic and public health literature demonstrates linkages between economic performance and public health outcomes (“wealthier is healthier”). • The availability of coal as a low-cost energy resource stimulates the economy and creates jobs. These economic benefits translate to improved public health outcomes – including lower mortality.

3. CEED Penn State Study(Rose & Wei, 2006) • Penn State University’s updated analysis of the economic benefits of coal utilization finds major impacts on economic output, household income and employment. • Penn State analyzed the “existence” value of U.S. coal resources projected to 2015, and two cases where coal-based electric generation is displaced by higher-cost energy resources.

4. Penn State methodology • Penn State used an input-output model to estimate the “multiplier” benefits of coal-based electric generation. • The “existence” value of coal use measures the aggregate economic benefits of coal as a low-cost energy resource. • Two “displacement” cases estimate the net economic effects of replacing 33% and 66% of coal generation with higher-cost alternatives, taking into account the positive benefits of investments in alternative energy supplies.

5. Penn State national results(Average of low and high price scenarios, 2015)

6. Penn State regional findings • The output, income and job benefits of coal-based electricity are broadly dispersed across the nation, and are not concentrated in coal-producing states. • Displacing coal-based generation with higher cost alternatives causes net economic losses in all regions and in nearly every state, even when the benefits of investments in alternative energy sources are counted.

7. Public health linkage • Research by M. Harvey Brenner, Ph.D., (Johns Hopkins University) for the U.S. Congress Joint Economic Committee, the European Commission, and CEED applied econometric models to estimate the premature mortality impacts of changes in economic performance (GDP, income, unemployment).

8. Brenner’s econometric research • CEED sponsored Dr. Brenner’s update of his 1979 and 1984 studies for the Joint Economic Committee relating U.S. economic performance to health outcomes. • Key study variables include GDP per capita, unemployment rate and the interaction between GDP and unemployment.

9. Model performance: actual vs. projected U.S. mortality

10. Overview of Brenner’s findings • Brenner’s 1984 JEC study showed that a 1% increase in the U.S. unemployment rate was associated with a 2% increase in age-adjusted mortality. • 2005 study with updated model produced comparable results. • The upward trend in real per capita income represents the most important factor in decreased U.S. mortality rates since the 1960s.

11. Energy case study: impact of coal displacement on mortality • Brenner applied his updated model to unemployment and per capita income findings from studies of large-scale displacement of coal (DRI 1998, Penn State 2001). • The 1998 DRI and 2001 Penn State studies relied on natural gas price assumptions of $2-5 per MMBTU, well below current and projected gas prices.

12. Hypothetical 100% displacement of coal induces 195,000 premature deaths “The estimated additional mortality in the year 2010, based on four different variations of the model, ranges from an additional 170,507 to 368,915 deaths for the displacement of 100% of coal-based generation. The author’s moderately conservative estimate is based on an annual change model at 195,308 deaths.”

13. Application to potential climate legislation “This upward scaling provided the basis for assessment of policy proposals that could result in specific energy supply changes. For example, the U.S. Energy Information Administration (EIA) estimates that climate change proposals before Congress could lead to the displacement of 59% to 78% of U.S. coal-based electric generation from reference case levels.”

14. Key finding: 150,000 premature deaths due to displacement of coal under S. 2028 “Given an estimated potential displacement of 78% of U.S. coal generation based on EIA's study of proposed climate change initiatives, the indicated premature mortality from reduced income and increased unemployment would exceed 150,000 deaths annually, absent direct and effective mitigation programs.”

15. Implications … • Brenner’s premature mortality estimates for potential climate change legislation are an order of magnitude greater than EPA’s estimates of the mortality benefits of PM2.5 standards. • These findings demonstrate the need for full consideration of the economic and public health consequences of legislative and regulatory initiatives impacting energy supply choices. • Recent shifts in natural gas prices, reflected in the 2006 Penn State study, will increase the adverse economic and public health consequences of policies discouraging coal use. • State and regional climate initiatives (RGGI, California, Illinois, etc.) should be carefully analyzed to assess the adverse public health consequences of increased unemployment and higher energy costs.

16. References M. Harvey Brenner, Ph.D., “Health Benefits of Low-Cost Energy: An Econometric Case Study,” AWMA Environmental Manager, November 2005. Adam Z. Rose, Ph.D., and Dan Wei, “Economic Impacts of Coal Utilization and Displacement in the Continental U.S., 2015” (Penn State University, supported by a grant from CEED, July 2006).