Can Louisiana afford renewable energy? Yes.

July 23 - BP has spent more than $3 billion to contain the oil disaster so far. And Goldman Sachs estimates that the total for cleanup and compensation will top $70 billion. Whatever the final price tag (it will be years or decades before we can calculate it), it is certain to fall far short of the cost of this crisis to the Gulf Coast.

For example, the price of petroleum for consumers is the $3.00 a gallon we pay at the pump. But the true cost of relying on oil for our energy needs includes every impact caused by bringing that gallon to the pump and burning it in your car; it’s the impact on a coastal community where more and more land is becoming sea every day because of canals dug by oil companies; it’s the impact of cancer on neighbors of an oil refinery caused by the toxic benzene in the air they breathe; it’s the rising sea-levels, droughts, famine, and all the other strife, hardship, and disruption global warming is causing, stoked by every gallon we burn. But how do you put a price on never being able to go home again? How do you quantify the transaction when a fisherman trades casting a net for dinner with spending food stamps at Wal-Mart? Such costs don’t have a place on a BP claims sheet.

The “hidden costs” of the fossil fuel industry – the impacts of finding, extracting, transporting, processing and burning fossil fuels on communities, workers, health, wildlife, air, land, and water – have also never been accurately captured in the price we pay for dirty energy. In economic terms they are “externalities,” meaning that they are not included in the market price of petroleum-based products, giving such energy the illusion of being cheaper than it is.

What is the total hidden cost for our energy consumption? One study, from the National Academy of Sciences, puts the annual hidden health costs of fossil fuels at $120 billion per year. But some have pointed out that this is only a fraction of the cost, as the study makes some severe underestimations, including omitting analysis of the impacts of global warming (which is a national security concern of our military).

Jay Hakes, former head of the Energy Information Administration at the U.S. Department of Energy, writes that if you “calculate the price of reliance on foreign oil, include the costs of conducting wars in Iraq.” Which, by the way, is an estimated $1-2 trillion, not to mention the lives left disrupted and destroyed.

Then there’s that estimated $70 billion that BP will pay for cleanup and compensation here in the Gulf, plus everything that final figure won’t cover - the 11 lives of the Deepwater Horizon workers who were killed initially; all the lives that will more slowly be drained and stressed and degraded through lost livelihoods, divorce, depression, cancer, respiratory problems and other illnesses; the wildlife and wetlands that are being destroyed; plus all the other intimate impacts Gulf Coast residents know they will have to shoulder without BP’s help.

But there’s more. Americans also pay for oil through public money - the industry is heavily subsidized and reaps the benefits of antiquated tax codes and loopholes. The oil industry receives $4 billion in tax breaks each year and attained $2.6 billion in subsidies from the 2005 energy bill, according to a recent article in the New York Times.

This disconnect, in which the price of the petroleum we consume falls far short of the true costs, is a big part of what is keeping America addicted to oil.

Making the Switch

The deeper we delve into the costs of fossil fuels, the more clear it becomes that we need to find a safer, more sustainable, more affordable way of doing things.

The good news is that we do have better options.

Clean, renewable energy sources like wind and solar won’t have many of the hidden costs discussed above. We don’t have to dangerously dig deep into the earth to find them; they won’t cause as much pollution and community health impacts; plus, they can help us solve the crisis of global warming, which experts estimate will have enormous, devastating, and lasting impacts on almost all aspects of our lives.

Clean and safe energy is not only better for people, communities, and the earth, water, and sky, it actually is affordable. As a consumer advocate and environmental organization, the Alliance supports renewable energy for not just the clean air, but also, the price tag. 

The costs to produce clean energy and reduce global warming pollution will likely be lower than anticipated, Nobel Prize winning economist Paul Krugman writes, as the private sector finds more innovative and affordable ways to meet our energy needs. In contrast, dirty energy will only get more expensive—because we are running out of it. The Deepwater Horizon oil rig was digging so deep in the first place because the age of abundant, accessible oil is over. And the more we have to scour and squeeze every last drop of fossil fuels out of the earth, the greater the risks and costs will be.

In fact, the transition to clean energy will be good for our economy. Really, really good. From creating jobs and jumpstarting manufacturing, to saving households thousands on utility bills, health care, transportation costs, and other daily expenses, clean energy can be the foundation for a strong American economy for decades or centuries to come. Imagine a booming U.S. economy where “green-collar” workers manufacture, install, and maintain the infrastructure for a cleaner, safer energy system.

A pair of 2009 reports from Green For All, Natural Resources Defense Council, the Center for American Progress, and the Political Economy Research Institute finds that investments in clean energy would be a boon for the economy, and for low-income households specifically. They estimate that a $150 billion shift in spending from fossil fuels to clean energy would create 1.7 million new jobs for America, significantly drive down the unemployment rate, and provide job opportunities across all education levels. This shift in spending would create 6,629 new jobs overall in just the New Orleans metropolitan area, the reports estimate.

Louisiana must lead the way.

The transition can and should begin in Louisiana. Nowhere else is the oil industry so entrenched with our way of life, and nowhere else are its costs so high. But the promise and opportunity of a clean energy economy is enormous here, and this oil disaster gives us a new chance to lead American to a safer, more prosperous future.

"Our state has tremendous untapped renewable energy resources and energy efficiency opportunities that can help us safely meet our energy needs while building new industries and putting Louisiana residents to work," says Forest Bradley-Wright, Senior Program Director at the Alliance for Affordable Energy.

We can get started today. For just 50 cents added to the average residential utility bill, Louisiana can be powered by 20% clean and renewable energy in just 10 years. In a recent public opinion poll of 1,000 randomly selected Louisiana residents, the majority said they are happy to incur the cost if it means safer energy sources. And energy efficiency measures are an easy and affordable way to wean ourselves off fossil fuels as we stimulate the economy. McKinsey reports energy efficiency measures can help households use 50% less energy, lowering bills and pollution at the same time.

Transitioning to clean energy will certainly have some costs associated with it, and we can make them higher or lower depending on how deliberately we protect our communities, workers, and ecosystem in the transition. For example, we can’t let oil rig workers be dumped from their livelihoods as abruptly as fisherfolk have been by the oil disaster. In the near term the few jobs that do exist – BP clean-up jobs, jobs in the oil industry – may seem like the only options. And we certainly can’t ask people to give up their jobs before we’ve created alternatives for them. But this lack of options makes it all the more necessary for us to create more opportunities for ourselves and diversify our economy and energy sources now. The need is particularly urgent when we look at the true cost Louisianans are paying to maintain America’s thirst for petroleum.

For Louisiana, these costs aren’t hidden anymore. As the state that has shouldered both the opportunity and the costs of the dirty energy economy, let’s lead the way towards a safer, cleaner, more affordable energy future.