Climate Change: The Main Externality of the Energy Market

Economists use the term “externality” to mean an unpriced cost or benefit imposed on an uninvolved third party as a result of an economic activity.

Fossil fuel companies sell us energy in the form of chemicals that when combusted provide both a) useful energy and b) various kinds of pollution.  We pay for the energy, but the long-term environmental damage caused by the pollution is unpriced, as no one is required to remove it.

Burning coal is the most damaging form of energy generation, with its greenhouse gas emissions, its heavy metals like cadmium, selenium, mercury, and arsenic, and its wide array of radioactive isotopes.

The fossil fuels industry does incur a sizeable cost, however; it’s the huge stack of cash they pay lobbyists to essentially bribe the U.S. congress into refraining from regulating the poisons that go into our atmosphere.