External costs from fossil electricity generation: A review of the applied impact pathway approach

Abstract

This paper reviews and compares 11 studies that have estimated external costs of fossil electricity generation by benefits transfer. These studies include 13 countries and most of these countries are developing countries. The impact pathway approach is applied to estimate the environmental impact arising from fossil fuel-fired power plant’s air emission and the related damages on human health. The estimated damages are used to value the monetary external costs from fossil fuel electricity generation. The estimated external costs in the 13 countries vary from 0.51 to 213.5 USD (2005) per MW h due to differences in fossil fuel quality, location, technology, and efficiency of power plants and additionally differences in assumptions, monetization values, and impact estimations. Accounting for these externalities can indicate the actual costs of fossil energy. The results can be applied by policy makers to take measures to avoid additional costs and to apply newer and cleaner energy sources. The described methods in the selected studies for estimating the external costs with respect to incomplete local data can be applied as a useful example for other developing countries.