Insights

October 17, 2012

Quantifying the Negative Impacts and Health Costs of Energy Consumption

 Many companies have completed inventories of their Scope 1, 2, and 3 greenhouse gas (GHG) emissions and recognize a financial and regulatory risk from ongoing high emissions. Leading companies struggle to quantify the impacts that these emissions have on human health, particularly in the communities where they operate. Companies that risk changes to their core business, such as healthcare companies, therefore recognize that an emissions inventory does not capture all of the costs of energy consumption.

SR Inc’s latest advisory provides an assessment of the methodology behind the Healthcare Energy Impact Calculator (EIC), an online tool to calculate the health externalities and financial impacts of energy use by healthcare facilities and office buildings. The advisory compares the EIC methodology with that of a RAND Corporation study and one used in a National Academy of Sciences report, so that executives can determine whether or not the EIC meets their needs. SR Inc finds that all three methodologies follow a three-step process to arrive at an estimate of impacts and costs:

1. Determine the pollutants (generally NOx, SO2, and PM 2.5) emitted by each generation source.
2. Estimate the health impacts associated with increases in each pollutant, such as increased incidence of respiratory illness.
3. Extrapolate the costs associated with increases in those health impacts. Costs may include societal costs, individual willingness-to-pay (WTP) to avoid impacts, and insurance costs. Step 3 is where the three methodologies vary the greatest.

To download a copy of SR Inc’s Advisory Healthcare Energy Impacts: Methodologies and Data, click here to access SR Inc’s Member-Only Digital Library. To learn more about gaining access to the Digital Library for your company or organization, leave a note through our Inquiry Form or Contact Us directly. Is your company exploring ways to quantify the negative impacts and costs of energy use? Tell us about it in the comments.