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The ability to derive useful energy from coal is not an externality, it is priced into the sale and consumption of the good.
by Brakenshire 9y ago
The ability to derive useful energy from coal is not an externality, it is priced into the sale and consumption of the good.
- roenxi 9y agoJust for your benefit, an externality is a cost or benefit that is incurred by a party not involved in a transaction. Cheap energy generates positive externalities. Obviously I'm not talking about the buyer and the seller of the that energy, I'm talking about the social polity at large. There are positives to having large cheap energy reserves, and those positives are absolutely not priced in to the energy market. Cheap energy is an enabler that frees resources up for other tasks. It is not a reasonable position for someone to pretend that coal is 'implicitly subsidied' because they've picked up on one negative externality and decided that it should be priced in; the net picture needs to be considered. If we were going to price in all the externalities of having such a cheap and convenient but dirty fuel it might well get an actual subsidy, but that would be silly in its own right. This is one of the major reasons why the pro-renewables crowd has such difficulty convincing anyone to price in the environmental impacts. Sure, if the debate is had and we all decide that a specific negative externality is to be priced in then I've got no leg to stand on and I'll sing a different tune. But governments so far have implicitly accepted that that negative externality should not be priced in.