What Does Buffett’s Railroad Play Mean For The Environment?

bnsfYesterday, famed American investor Warren Buffett announced that his holding company, Berkshire Hathaway, would purchase the remaining shares of Burlington North Sante Fe railroad that it did not already hold. The $44 billion acquisition is the largest in Berkshire’s history, and pundits have been opining on what it says about Buffett’s forecasts for the U.S. economy (not for nothing is he called the “Oracle of Omaha”).

The dominant narrative is that by purchasing a railroad, Buffett has made a bet on a U.S. economic recovery. That is to say, the demand for the cross-country shipment of raw and finished materials would increase, and Buffett’s investment would prosper.

But the story has an environmental component, too. Buffett himself said that in terms of relative energy efficiency, rail transport is done “in an extraordinarily environmentally friendly way.” Buffett posited that on average in the United States, one gallon of fuel can move a ton of goods 470 miles over rail (or 435 miles, either way); compare to trucking, which gets anywhere between 130 to 186 ton-miles/gallon, depending on who you ask. This is quite a large difference in any case, and considering that domestic freight transport emissions have increased 58% since 1990 and alone exceed the total GHG emissions of Canada, they will likely be a target of future U.S. climate change legislation. In essence, the narrative goes, Buffett thinks that the future of transport in the U.S. will be trains out of environmentally-induced economic necessity.

Meanwhile, skeptics have found another reading. Continue reading


NAS report on “Hidden Costs”

Coal smoke

The National Academy of Sciences released an extensive report today that estimates some of the externalities of energy production and consumption.  The report is limited to public health expenses incurred, leaving out costs related to ecosystem damages or climate change.  The unpaid costs for health related to energy were $120 billion.   The breakdown of sources is enlightening.  Coal powered electricity accounted for the biggest share followed by vehicles at $62 billion and $56 billion respectively.  The report also assigns 43% of coals $62 billion to about 40 of the dirtiest emitters.  The health costsfor coal equate to an unpaid cost of 3.2 cents/kwh.