OPINION: The Devastating Human Costs of Taiwan’s Fossil Fuel Subsidies

credit: epa.gov.tw
Why you need to know

The true or 'natural' cost of burning coal is off the charts, not least in terms of negative impacts on health and climate.

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Burning fossil fuels for energy drove rapid improvements in the quality of life for humans since we first began burning coal during the industrial revolution in the 18th century. Since then, we have upped the ante dramatically. From 1965 to 2016 global coal consumption more than doubled, and with that rise came increasing air, water, and carbon pollution. As renewable energy continues to increase in efficiency, the costs of fossil fuels and the lost gains from subsidizing them grow increasingly apparent.

Simply put, oil spills increase GDP by creating jobs for cleanup.

In Taichung, the effects of fossil fuel pollution remain obvious. Large protests are planned for December, organized by medical professionals, to encourage the government to reduce coal burning. The city government in November proposed cutting coal firing at its largest plant by 24 percent. While far from ideal, it’s likely even this small action will save lives. Some claim such a cut will “cost” society more, but have those critics really done the math? Taiwan Power Co., which operates the plant, is pushing back against the city’s environmental protection bureau on the grounds that the proposed cut would undermine its ability to provide power to the whole

In a previous article I explored the size of Taiwan’s fossil fuel subsidies. One report from the International Monetary Fund (IMF) estimated the global economic impact of those subsidies in 2013 and 2015. Excluding externalities, which are the additional industrial costs of pollution not factored into traditional accounting, subsidies totaled US$300 million. But including the externalities, the report found US$26.5 billion in damages. For many, the impacts of fossil fuels can seem abstract, but with a little context anyone can understand the high human costs of cheap fuel.

Natural capital

In traditional economics, analysts review traditional business performance metrics, levels of debt, management costs, revenue, etc. While important for profitability, these metrics ignore criteria important to life. Using combinations of surveys and data analysis economists can translate the costs of industrial activity into the common language of currency.

These estimates reflect lost value, forgone gains, or hidden costs. For this particular IMF report, they only focus on the impacts of burning fossil fuels directly. They ignore the true life cycle cost of coal. Even under less than ideal conditions, coal produces five times as many greenhouse gases per kilowatt hour as photovoltaic solar panels over their lifetimes. This does not include the damage caused by particulate pollution, acid rain, loss of habitat, or healthcare costs. Indeed, most industries would not be profitable if they considered true externality costs. Yet, governments continue to endorse “cheaper” fossil fuels.

A report from Trucost, a research company that advocates for a low-carbon economy, on natural capital costs in industry found that none of the top 20 most valuable regional sectors (including coal power, cattle ranching, rice farming, etc.) would make a profit if they took into account their natural capital costs.

Total natural capital costs for these global industries total up to US$7.3 trillion or roughly 13 percent of global GDP (in 2009), according to the report. Cost can be broken down by impact, including greenhouse gas emissions at 38 percent, water use at 25 percent, land use at 24 percent, air pollution at 7 percent, water pollution at 5 percent, and waste covering 1 percent. The public pays for these extractions through increased cancer rates, higher levels of drought, increased storm surges, and other common environmental ills. The tragedy is that traditional accounting categorizes these costs as economic benefits. Simply put, oil spills increase GDP by creating jobs for cleanup.

Taiwan’s freeloading fuels

Clearly natural resource extraction and fossil fuel burning leverages increased costs on the public through greenhouse gas emissions, air pollution, and more. What does this mean for Taiwan? Since this island mined its only fossil fuel sources long ago, industry must import coal, oil, and natural gas. The government shoulders this fee, in effect, creating larger and larger costs on public resources though increased air pollution and greenhouse gas emissions.

Finding specific information on the impacts of subsidies, required further help from Vivian Lung from climate change advocacy group 350 Taiwan. Despite the accuracy of the IMF report these numbers needed additional analysis for clarity. Inside the report, 350 found externality costs in Taiwan totaled US$26.5 billion in 2013, rising to an estimated US$31.6 billion in 2015. These costs total 5.43 percent of Taiwan’s GDP. Of this cost, coal generates most of the impact, totaling US$14.4 billion. Oil comes in a touch below this at US$12.5 billion. The remaining costs come from fuel oil subsidies and electric power subsidies. Coal, with the highest proportion of the costs, requires further exploration.

Coal combustion causes air pollution through increased levels of particulate matter smaller than 2.5 microns (PM 2.5), sulfur emissions which cause acid rain, and nitrogen pollution which cause smog. Sulfur and nitrogen together form the basis for ground level ozone, commonly called smog. Ground level ozone, unlike it’s friendly counterpart in the upper atmosphere, reacts easily with many compounds — especially the soft tissue in your lungs. This leads to asthma, bronchitis, and other chronic lung diseases.

Medical researchers and public health experts worry about PM2.5 because of its small size. With a diameter smaller than 2.5 microns these particles can easily penetrate deep into your lungs shredding your interior tissues and delivering harmful pollutants directly into your blood. For Taiwan, especially the middle and south, this pollution causes measurable harm.

Health effects in Taiwan

According to a NTU College of Public Health report, an estimated 6,000 people die every year from air pollution across Taiwan. Using healthcare data combined with addresses, researchers could quantify illness based on proximity to air pollution. In their study one third died of heart attacks, 1,240 died of coronary heart disease, 645 from tuberculosis, 1,350 from lung cancer, 2,140 from stoke. It is true people can get lung cancer from none air-pollution related sources, but for these 6,000 deaths, each disease resulted from air pollution.

Further in the report, they estimate deaths from lung cancer, stroke, heart disease, and other air pollution-related causes rose 22 percent from PM2.5 pollution in Yunlin county, western Taiwan. What about Hualien county on the other side of the country, protected from heavy industry by Taiwan’s Central Mountain Range? Less than 9 percent of related deaths come from air pollution. While these relatively short-term impacts appear obvious, carbon pollution will cause damage for centuries to come.

The cost of carbon

Taiwan ranks 24th in the world for carbon emissions, and slightly lower for emissions per capita. Taiwan ranks higher in per capita emissions than Japan, Germany, or most other developed economies (excluding the U.S. and Canada). Increased carbon emissions also lead to strong typhoons, higher sea levels, increased droughts, and higher urban temperatures, according to the Intergovernmental panel on climate change. These negative changes will make life increasingly perilous and difficult in Taiwan.

Economists quantify the damage of carbon emissions using the “social cost of carbon”. By quantifying the impacts of increasing global temperatures, and understanding how much 1 ton of CO2 will increase temperatures, we can therefore quantify the cost. The high-end scenario, and therefore the one we most wish to avoid for climate change, prices carbon emissions at US$105 per ton of CO2. Many resource extraction companies already internally price carbon. Shell Oil, for example, assumes a cost of US$40-80 per ton of CO2. Couldn’t Taiwanese government agencies or corporations adopt such a model?

The IMF report calculated the cost of coal energy in Taiwan to equal US$6 per gigajoule of coal. On average, this equals US$132 per ton of coal. Yet, according to the International Energy Agency, the average price of coal per ton is US$50. Thus, in Taiwan the full cost of coal is more than double the actual price paid to purchase it. This government-sponsored waste prevents Taiwan’s future energy development, harms its population, and negates any moral authority to complain about air pollution in other countries.

What to do?

If these numbers seem impossibly large, I suggest further reading some of the source materials to understand the staggering scale of environmental destruction today. For too long the average citizen has ignored the obvious risk of fossil fuel combustion on human health. If it helps, Taiwan is not alone in its suffering. The whole world is under the gun from pollution.

The Lancet Commission recently published a report finding that environmental pollution is the largest source of premature death and disease today, claiming 9 million deaths per year. Taking this number into account, the 6,000 deaths from air pollution seem conservative. But what to do next?

First, protect yourself and your family. Check an air pollution quality index daily (AQI), and wear a mask outdoors when pollution levels reach an unsafe level. Children and the elderly are especially vulnerable. Be sure the mask is rated to block PM2.5 a simple mask for an illness does not work. Next, use an air filter at home for both indoor and outdoor sources of air pollution. It doesn’t need to be expensive, all air filtration systems work through pulling ambient air past a high efficiency particulate air (HEPA) filter. But, what about long term?

You can only protect yourself so much, and those who most need protection with lower incomes may not be able to protect themselves at all. Therefore, we need to demand change. Companies can purchase alternative energy, citizens can write letters, each person can contribute in their own way to raise awareness about energy issues in Taiwan. This island has the technology and capital to replace coal, and hopefully someday other fossil fuels as well. But first, we must take responsibility for our own past actions, and work to create a cleaner future today.

TNL Editor: David Green

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