As an energy analyst, I often see in my own work the drastic effect of scope on analysis results.

For example, take a simple-sounding question like, “How much energy is required to produce a ton of iron?”

This is a relatively straightforward analysis if the scope of energy usage includes only the iron plant. You count the fuel and electricity going in; you count the iron coming out. Divide the former by the latter and badda-bing. Done.

But what about the energy consumed to mine the iron ore out of the ground? And to transport the ore to the iron plant? And to transport the iron from the plant to its destination? And to mine the coal out of the ground? And to convert the coal to coke? And to manufacture the bulldozers and trucks that mine the coal and ore? And to manufacture the steel that goes into the equipment? Now we’re back to iron, again. We’re not close to done and we’ve already tied ourselves in a knot.

In practical terms, it’s impossible to include all the factors in an energy analysis like this. At some point, the analyst has to draw an arbitrary line and say, “Good enough.” Hopefully, this line is drawn in a place where the ignored factors constitute an insignificant percentage of the total result.

A recent report from the National Research Council tries to expand the scope of the analysis of energy costs. It takes into consideration the health impacts of energy use, which are rarely specified in quantitative terms.

By design, this report does not include the costs of energy use in terms of climate change, but that is a beast of a study on its own. Analyzing climate change costs requires forecasting the future, while this report is based on historical data.

The report also ignores the national security costs of energy use. I understand why this is hard to measure, but it should definitely not be ignored. What is the cost of wars over control of the terrorist-riddled oil-producing nations that we are dependent upon for importing petroleum, both in dollar terms and in lives lost?

Food price increases are not considered, either. What is the cost, particularly to the poorest in the world, of using food crops to produce ethanol? An economist could, if necessary, produce a figure tying these figures together. “Malnutrition deaths per gallon”, perhaps.

Nonetheless, this is a valuable report that will hopefully illuminate for many the hidden costs of our energy use. Understanding these costs allows us to make better-informed decisions, considering all the benefits and pitfalls before creating unforeseen negative side effects.

Don’t forget the importance of scope. It’s always a bigger picture than you can imagine.

Excerpt:

“Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use,” a new report from the National Research Council, a branch of the National Academies, tries to put a dollar figure on what economists call externalities.

The study, however, comes with a major caveat: it did not look at the impact of energy on climate change and ecosystems, or at rising food prices and the risks to national security.

Still, the report, which was requested by Congress in 2005, estimated that the hidden cost of energy on human health was $120 billion in 2005, the last year for which full data was available.

Unsurprisingly, the biggest contributors to these extra costs were coal-fired power plants, which generate half of the nation’s power but which also accounted for $62 billion in hidden damages associated with the emissions of pollutants like sulfur dioxide and nitrogen oxide, and particulate matter like soot or fine dust.

The report also found that in 2005 the vehicle sector produced $56 billion in health and other non-climate-change damages, with $36 billion from light-duty vehicles and $20 billion from heavy-duty vehicles.

via Report Shows Hidden Costs of Energy – Green Inc. Blog – NYTimes.com.