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2012 Dorman Lecture Explores 'The Hidden Costs of Energy'

CMU President presents the report of the National Research Council committee he chaired

February 20, 2012 —

Carnegie-Mellon University President Jared L. Cohon brought an environmental engineering megaproblem to USC's Ronald Tutor Hall for the 2012 Albert Dorman Lecture.

2012 Dorman lecturer Jared Cohon, left, and Albert Dorman. (Lance Hill photo)
For an audience that included the lecture’s illustrious namesake plus President C.L. Max Nikias, Viterbi School Dean Yannis C. Yortsos and numerous faculty, Cohon began by giving an overview of the 2005 total energy consumption in the United States for power, heating, transportation and all other uses, broken down by source.

He then presented striking calculations of the “externalities,” the giant costs to the nation of this energy that had not been included in the total price paid for it not including the possible costs of climate change. And then he estimated a future range for these costs including climate change and discussed what could be done to change the bottom lines.

Before he began, however, introductions were made that celebrated the distinction of the speaker, the lecture's namesake and the hosts. First up was the new chair of the Sonny Astani Department of Civil and Environmental Engineering, which organizes the Dorman lectures. Professor Lucio Soibelman, who came to the helm of the Astani Department from Cohon’s university, expressed his pleasure that his recent CMU leadership was the speaker and then introduced Dean Yortsos.

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Dean Yannis C. Yortsos discusses Cohon's speech with Cohon.

The Dean spoke about the remarkable achievements of Dorman, who holds a Viterbi School civil engineering M.S. and is the only member of the National Academy of Engineering who is also a fellow of the American Institute of Architects. He is also the founder of one of the nation’s largest engineering firms, AECOM Technology Corporation. “And in his spare time,” Yortsos added with a smile, “he built Disneyland.” (Dorman began working on that vast project in 1954, at the age of 28.)

Yortsos went on to introduce President Nikias as a professor of both electrical engineering and classics, in addition to his remarkable USC career as dean, provost and president. Nikias then took the stage to describe the career and achievements of Cohon as a civil and environmental engineer who came to CMU following exceptional work at Yale and Johns Hopkins, and while at CMU has served in multiple government advisory roles.

A prominent example of this was his recent service as chair of a blue ribbon U.S. Research Council committee which at the request of congress produced a 2009 report with the same title as his Dorman lecture, “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use.”  Cohon explained the report and its conclusions in detail to a rapt audience.

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Reunited: Astani chair Lucio Soibelman, left, recently came to the Viterbi School from the CMU civil engineering department, the original CMU faculty home of CMU president Jared Cohon, shown holding the award commemorating his Dorman lectureship.
He began by noting that the research was unusual because it was at the border between engineering and economics  — a professor of economics, Maureen L. Cropper, served as the co-chair — meaning the two disciplines had to build complex hypotheticals in territory somewhat unfamiliar to both. The task was to estimate the dollar value of externalities, a process that was challenging for both engineers and economist. Externalities are external precisely because markets don’t reflect them as costs nd a consequence is that markets themselves cannot correct damage they cause – “it must come from government,” Cohon explained.

Most of the energy externalities grow out of human health risks from specific pollutants, localized in specific places. The study  assigned values for years of life, and then calculated the year's loss from premature deaths from pollution-related health. Other externalities were also significant, but the health risks made up most of the $150 billion that the committee calculated total 2005 U.S. energy production produced, of which $62 billion came from coal generation of power and $56 billion from transportation from the production and combustion of motor fuels, or about 23 to 38 cents per gallon,

For 40 minutes, Cohon explored the externalities of numerous specific areas of the energy economy, from

Albert Dorman. (photo Lance Hill)
coal plants, the largest source, to transportation in second place. The exposition visited some paradoxical corners – electric cars have higher externality than conventional gas vehicles, for example, their battery production costs as well as their electricity consumption.

He then spoke about possible measures to reduce externalities and create an economy where market energy prices would reflect true and full costs — possibly by taxing emission, possibly by creating cap and trade markets. He devoted the final ten minutes of his talk to ways to estimate the externalities of climate change, doing so by offering an order of magnitude range of impacts. He emphasized that the path from report to action would be a difficult one.

And then questions came from the audience, invariably accompanied by expressions of gratitude for an extremely enlightening presentation, and complete consensus that that this lecture was worthy of its grand name.

More information on the report is here. The complete report can be downloaded here.


from left: USC Viterbi Dean Yannis C. Yortsos, USC President C.L. Max Nikias, CMU President and Dorman lecturer Jared Cohon, USC Astani Department chair Lucio Soibelman and Albert Dorman. (photo Lance Hill)