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The New Independent Home

     by Michael Potts
from chapter 1 :

The Hidden Costs of Electricity


     In terms of hidden costs, those associated with the kilowatts we pump through our appliances are probably the most expensive and best disguised. Let us enumerate briefly here, identifying the issues without trying to quantify.

redball.gif - 203 Bytes 1   Costs of extraction and transportation. These are considerable, and largely hidden. Most power generation is presently fueled by natural gas and coal. Both resources are still reasonably abundant on our continent, and supplies should last well into the next century. Since both are extracted, given up freely by the earth, their true cost is impossible to reckon. The "monetized costs" (which we pay with real money) are arbitrary, although based on financially accountable extraction and transportation costs, plus a "reasonable" reward for ownership. Hidden costs, called externalities because they are external to the cost calculations used by the industry, are found all along the way: health risks and damage to the environment from extraction through delivery, emissions and losses during transportation, and (hardest of all to put a price on) the possible extinction of life forms, cultural sites, and artifacts, to name only a few. It is of course unthinkable that we might also pay the cost of replacing the resource.

There are many costs associated with any mine, well, farm, or other resource extraction activity; each industry and site differ. This generalized representation of relative costs includes those we pays for (the dollar signs) and "externalities" which are paid for indirectly, or not defrayed at all. Externalities.gif - 13013 Bytes
For heritage fuels, which have been millions or billions of years in the making, the cost of replacing the resource is much larger than all the other costs, accountable and external. Because scientists have not been able to produce synthetic petroleum, for example, at anything approaching a competitive cost, the actual replacement cost is unknowable. ExternalitiesR.gif - 27460 Bytes

redball.gif - 203 Bytes 2   Waste created when electricity is generated. Conventional power plants create megatons of fly ash and scrubbed sulfur; belch tons of noxious fumes (although, compared to other dead-dinosaur burners like automobiles, they are quite clean), and are, at the end of their relatively short life spans, monstrous stacks of used, useless, and often toxic junk. Until recently, the standard utility response to this problem has been to bury or dump the pollutants and let the machinery rust in place.
     In the extreme case, nuclear power plants bring a whole new meaning and time frame to the problem of defining and paying the costs of disposal. Twenty years after the first commercial nuclear plant was turned off, we have yet to decommission a nuclear plant. To do so will require that many of its parts and ingredients be encapsulated for periods up to four times the half life of plutonium, nearly 100,000 years at the very least. This is, above all, a building and communications challenge far beyond anything ever undertaken: Our oldest structures are barely a tenth that old, and how can we be sure that our warnings -- "Keep out! Radioactive waste!" -- will be intelligible in twenty centuries? No scientist denies that a nuclear plant's whole cost should include funds for site and material decontamination; though never admitted into consideration during the proposed new plant's cost/benefit analysis, this cost may exceed the nuclear plant's construction cost by a thousandfold or more.

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Plutonium is considered one of the most toxic substances known; a single atom can inflict fatally carcinogenic, mutagenic, and teratogenic harm if it lodges within a life-form. Plutonium -- element Pu -- is astonishingly persistent: its virulence is reduced by half every 22,500 years, its halflife. Since Pu is so toxic in such small quantities, it is reasonable to classify it as a "zero tolerance" pollutant, which means waste plutonium sequestered for more than 100,000 years -- twenty times longer than the oldest known buildings have been standing -- may still be unsafe.

redball.gif - 203 Bytes 3   Inefficiencies in generation and distribution. Some of the extracted material goes awry, occasionally spectacularly, as in the case of the Exxon Valdez, but more often invisibly. Experts disagree about how much electricity is lost between generator and plug, or where it goes, but lost electricity amounts to about half the total generated. "Stray electricity" causes deformed livestock and decreased dairy production, but claims are quietly settled out of court by utilities when proven undeniably. Health experts speculate about the effects of electromagnetic radiation (EMR) emanating from powerlines on humans, animals, and plants, but there is little certainty; we are not surprised that industry-supported research denies the existence of risks due to EMR while anecdotal information suggests there is something ugly going on. Can we even begin to evaluate the harm done to our magnificent scenery by powerlines draped insouciantly over hill and dale?
     By improving the efficiency of North American and European homes, we could use half as much energy as we do now without sacrificing a bit of comfort. We could then rely on locally-produced electricity, reducing electricity consumption by three-quarters, and eliminating our need to burn fossil fuel for electricity.
     Perverse incentives govern the massive, self-interested power structure already in place, and so our best efforts to identify and reduce energy's true whole-life, whole-system cost to living humans and to all future life on the planet are frustrated. Long-term survival ought to be a greater concern than short-term cost, but in a corporation-dominated economy motivated by quarterly profit, environmental poisoning and resource depletion are denied until they are overwhelming. The fact that our infrastructure and installed equipment wastes three of every four units of electricity generated may have a fiscal meaning, but it is also threatens the continuity of our species. Nature simply does not allow such heedless wastefulness to continue.
     If we are to survive, we must hasten to institute sweeping changes, so our individual efforts will compound themselves rapidly -- before the petrochemicals are used up and our environment becomes inhospitable to all but the insects and genetically engineered microbes that love to eat toxins.

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According to classical economics, price is a function of supply and demand. This graph shows projected electricity price based on cost per kilowatt hour in California. The lowest curve shows the "steady-state" price quadrupling in 40 years. This projection takes dwindling supply and increasing demand into account. Supply dwindles less sharply due to assumed technological break-throughs (shown as "Tech shifting"), but experts seldom predict that demand will decline. I have optimistically accepted the "tech-shifted" demand line, based on my assumption that rising prices will motivate social reforms and increased applications of efficient technology, somewhat reducing the forces that could raise the projected "Scarcity Price" tenfold in the next twenty years. Data for 1995 and before is actual, showing the jittery uncertainties of actual resource supply.

     What is true for electricity also applies to every other use of energy, from the cars we drive to the way we heat our hot water, the way we keep our homes comfortable, and the way we refrigerate our food. In the 1950s and 1960s, decisions about energy-consuming devices were made assuming that energy costs were then and always would be a minor component of overall costs. In 1973, Americans received a wake-up call we are just now beginning to forget, but the 1973 and 1978 oil crises sounded the death knell of easy energy. A 1998 Scientific American article written by two senior oil company scientists assures us that we have seen the last of cheap oil. Energy costs are highly politicized, and I believe that America's distorted energy market deliberately and short-sightedly prices energy at only one third of its real value to stimulate its growth-based economy. Another third is collected indirectly, through personal taxes converted into tax breaks for energy corporations, subsidies, and gunship diplomacy. The remainder is borrowed from the future: a mortgage on our grandchildren's quality of life, which they will be forced to repay through reduced quality of life, diminished natural diversity, and staggeringly expensive necessities. Resource costing based on an economic model called "Hubbert's Peak" demonstrates that production starts to fall and prices start rising sharply when half of any resource is extracted. The evidence suggests that oil, our most important energy resource, was at or beyond that point before 1998, with no credible replacement in development. All petroleum demand projections, based on a burgeoning population, show a steadily increasing demand, with no end in sight. The longer oil prices are artificially depressed through political means, the steeper the eventual upward oil-price slope will be; it may look more like a wall than a slope: the Last Drop of Oil Wall. Therefore, as caring parents and stewards of the earth, or prudent managers, or wise investors, it makes sense to reduce wasteful consumption, and adjust our personal budgets and energy-use plans in anticipation of rising prices and disrupted flows of extracted energy, even while enjoying the last years of life in an energy fool's paradise.
     In order to use less, we must first examine what we use . . .

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When half a resource is used up, as is the case with petroleum, the price inevitably starts to rise; if demand is undiminished, cost skyrockets. Experts believe this "Hubbert's Peak" was reached with petroleum in about 1998. Although scarcity and increased cost may motivate us strongly to seek energy sources other than fossil fuels, the best arguments in favor of efficient use of current solar income are reduced pollution and preservation of heritage materials that may prove essential to future generations.

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The New Independent Home


People and Houses that Harvest
the Sun, Wind, and Water
a book by Michael Potts
paper   *     8x10   *     408 pages
8 page color section + 200 illustrations:
b&w photos, graphs, charts, and diagrams
ISBN 1-890132-14-4   *     $30.00

this book at Amazon.com

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Michael & Sienna Potts, websters updated 25 December 2002 : 14:35 Caspar (Pacific) time
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