(News) The high cost of Indiana's fossil fuel dependence


When President Obama's American Clean Energy and Security Act (H.R. 2454) passed the US House of Representatives on Friday, it did so with the smallest of margins. And while the Senate won't take up the legislation until after the holiday, interested parties on both sides of the energy debate continue to advance their positions.

"This Independence Day, we are calling on Congress to break our dependence on Big Oil and Dirty Coal," said John Carroll of Environment America. "Instead of allowing the costs of fossil fuels to continue to mount, Congress should repower America with clean, renewable energy that will create jobs and stop global warming."

While those who oppose ACES say it will increase the cost of energy to the average American, other groups contend that the environmental and monetary savings are there and NOT passing the legislation would actually cost Americans more in the long run. In a report released today by Environment America, "The High Cost of Fossil Fuels: Why America Can't Afford to Depend on Dirty Energy," the group projects that not changing from fossil to alternative, renewable energy sources could cost Indiana residents dearly.

According to Environment America, nationally, in 2006, U.S. consumers and businesses spent $921 billion on fossil fuels — more than was spent on education or the military.

Should habits and industry remain unchanged, it is predicted that America is on track to spend between $23 trillion and $30 trillion on fossil fuels between 2010 and 2030, the high end of which is more than double the nation's total economic output in 2007.

"These figures do not include the untold damages to our environment, health, and society resulting from the production and use of fossil fuels — such as global warming, air and water pollution, mountaintop mining, and oil spills," says Carroll. "Every additional dollar we spend on fossil fuels just buys us more global warming pollution, more smog, and more asthma attacks."

"We applaud Representatives Andre Carson and Baron Hill for supporting the bill. We are extremely disappointed that Representatives Buyer and Burton voted against it.

"Now is the time for bold and meaningful action on clean energy and global warming. The Senate must strengthen and pass this critical bill. We urge Senator Bayh and Lugar to move quickly to enact strong solutions for a clean energy economy and stopping global warming," said Carroll.

According to Carroll and Environment America, Indiana will spend as much as $2,011 more per person every year on fossil fuels in 2030, if we stay on our current energy path. In 2006, Indiana spent $3,608 per capita on fossil fuels. In 2030, that figure is expected to rise to between $4,304 and $5,620 for every man, woman, and child in the state, as much as a 56 percent increase.

Other findings in the report include:

* The United States depends on fossil fuels for 85 percent of our energy supply.

* In 2006, American consumers and businesses spent $921 billion - or close to 7 percent of America's gross domestic product - on fossil fuels, The High Cost of Fossil Fuels more than the nation spends on education or the military. In 2008, national expenditures on fossil fuels likely topped $1 trillion for the first time ever. Each year, more than 70 percent of this money is spent on oil.

* In 2007, America spent more than $360 billion importing fossil fuels, with the vast majority of that money spent on crude oil. That money is a direct transfer of wealth from American consumers to oil companies and foreign governments.

* For every dollar that an American household spends each year, about 10 cents are likely to go toward the purchase of energy, with most of that money spent on fossil fuels.

* Fossil fuel combustion is the leading contributor to global warming, which, in addition to being a looming environmental and human catastrophe, could inflict massive economic damage

as well:

* Sea level rise and an increase in the severity of storms could put key cities such as New York, Miami and New Orleans at greater risk of costly storm damage. A 2008 Natural Resources Defense Council study estimated that high-intensity hurricanes could cause as much as $422 billion in damages in Atlantic and Gulf Coast states between 2025 and 2100.

* A 2007 study by researchers at the Lawrence Livermore National Laboratory and the Carnegie Institution at Stanford University found that global production of three of the six largest global crops experienced significant losses due to global warming between 1981 and 2002. The study concluded that global wheat growers, for example, lost $2.6 billion and global corn growers lost $1.2 billion in 2002.

* Global warming is forecast to inflict a variety of other costs, including declining rainfalls and rising temperatures that will combine to cause large and extended drought conditions in regions like the Southwest, and impacts on public health due to heat-related illnesses, greater formation of ozone smog, and increases in vector-borne disease.

* An assessment by former World Bank Chief Economist Sir Nicholas Stern indicates that global warming has the potential to reduce global per-capita consumption by as much as 20 percent.

* Fossil fuel production and use also imposes other environmental and social costs beside those related to global warming.

* Fossil fuels are a leading source of air and water pollution. The economic cost of air pollution in sectors regulated under the Clean Air Act has been estimated at $9 trillion between 1970 and 2000, with costs resulting from pollution-induced early mortality, illness, health care costs and lost productivity.

* The production and transport of fossil fuels results in routine pollution of the environment and Executive Summary occasional catastrophic accidents. The December 2008 collapse of a coal ash pond outside a Tennessee Valley Authority power plant covered 300 acres in sludge and will cost an estimated $825 million to clean up. Between 1990 and 2006, 51 large oil spills in the United States resulted in the expenditure of between $860 million and $1.1 billion in removal costs and compensation for damages.

* The United States will spend an estimated $23 trillion on fossil fuels between 2010 and 2030 should energy consumption and fossil fuel prices follow U.S. government projections - an amount equivalent to nearly three years' worth of income for the entire American workforce at current earning rates.

* Fossil fuel expenditures will decline in the next several years due to the lingering effects of the economic recession, but annual expenditures of more than $1 trillion per year - which proved devastating to the economy during early 2008 - will become the "new normal" by the middle of the next decade. By 2030, the United States can expect to spend approximately $360 billion more per year on fossil fuels than we did in 2006.

* If fossil fuel prices are driven higher, faster, the United States could expect to spend more than $30 trillion on fossil fuels between 2010 and 2030. Fossil fuel expenditures would again surpass $1 trillion in 2011 and by 2030 we will be spending $750 billion more per year on fossil fuels than the nation did in 2006.

* Oil prices are a main driver of higher expenditures. If oil prices reach $200 per barrel by 2030 - an event more likely to happen as world oil supplies become increasingly strained - the United States will be spending $1.3 trillion out of $1.6 trillion total fossil fuel costs on oil alone.

* Rising fossil fuel expenditures will affect all 50 states, but states with a greater reliance on fossil fuels, particularly oil, will experience greater increases. (See Appendix A for projected fossil fuel expenditures for all 50 states.)

* A 2007 analysis by McKinsey & Company estimated that the United States could reduce its emissions of global warming pollution by approximately 1.2 billion metric tons of carbon dioxide per year (equal to about 20 percent of today's fossil fuel emissions) with net dollars savings. In other words, these investments are economic winners on their own terms - even excluding benefits for the environment, public health and America's security.

* A recent Energy Information Administration analysis of the American Recovery and Reinvestment Act (ARRA) found that the Act's provisions for residential and commercial energy efficiency improvements will yield significant savings. The EIA projects that the law will reduce residential and commercial energy bills by $13 billion in 2020 and $21 billion in 2030.

* The recent move by President Obama to increase federal vehicle fuel economy standards to 35 miles per gallon by 2016 will deliver $20 billion in net savings to consumers in 2020 at gasoline prices of $2.25 per gallon. If gasoline prices hit $4 per gallon, the net benefits would balloon to $70 billion.

* According to the Union of Concerned Scientists, transitioning to a clean energy economy could cut global warming emissions while saving consumers and businesses $465 billion each year by 2030, with $1.7 trillion in net cumulative savings between 2010 and 2030.

A full copy of the Environment America report can be found at


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