External Costs Of Electricity Generation Research Articles

External costs of electricity generation in 27 European countries from 2010-2030: Pathway toward sustainability or business as usual?

Electricity generation in Europe is undergoing a fundamental change. The aim is to increase sustainability by reducing emissions. Each country has a different electricity mix, and there is no established method for measuring environmental impacts of electricity production with a single monetary indicator, in a uniform manner, and with country-specific data. To address this gap, a model that measures the costs of 19 environmental externalities (usually, types of emissions) has been developed. Using country-specific technologies, electricity mixes, and external cost rates, the development of external costs of generating electricity in 27 European countries between 2010 and 2030 is assessed and analyzed. The simulation results show that the external costs vary heavily between 2.1 and 22.4 euro cents per kWh in this period. Despite the initiated transformation of the energy systems in many EU countries, external costs per kWh are decreasing in only eight of them. This fact underlines the need for a drastic change in national energy strategies. Overall, the results show that more far-reaching policy measures are needed in order to significantly reduce the external costs of the energy sector in Europe. The article raises the level of granularity of research on the external costs of electricity in Europe by combining extensive country-specific emission data and country-specific external cost rates.

The impact of climate change on mortality in the United States: Benefits and costs of adaptation

AbstractThis paper reviews and extends the recent empirical literature on the impact of climate change on mortality and adaptation in the United States. The analysis produces several new facts. First, the reductions in the impact of extreme heat on mortality risk previously documented up to 2004 have continued up to 2019, consistent with continued investments in health‐protecting adaptations to high temperatures. The second part of the paper examines the private and external costs of electricity generation and consumption related to high temperatures, a commonly used proxy for measuring the consumption of adaptation services. Extreme temperatures increase electricity demand in the residential sector (relative to moderate temperatures), but not in the commercial, industrial and transportation end‐use sectors. The additional electricity demand in response to high temperatures results in significant external costs due to the release of local and global pollutants caused by the combustion of fossil fuels in order to produce electricity. These external costs, documented for the first time in this paper, are one order of magnitude larger than the private cost of adaptation associated with electricity consumption.

A Cost-Benefit Analysis of Bakhtiari Hydropower Dam Considering the Nexus between Energy and Water

Hydropower stations have supplied most of the green electricity in various parts of the world. Nonetheless, the economic profit of hydro-electricity lies beyond its social costs in many cases. Despite the short-term economic benefits of large dams, their sustainable pros and cons are doubted. This study aims to investigate the long-term profitability of large hydropower stations by considering the nexus between the environmental, economic, and social aspects. Much progress has been made in simplifying feasibility studies of hydropower stations by developing comprehensive software and models according to the United Nations Sustainable development goals. Developed by International Atomic Energy Agency (IAEA), the SimPacts has become one of the most frequently-used simple models to estimate the external costs of electricity generation since 2003. Hydropower’s Environmental Costs Analysis Model (HECAM) is a popular user-friendly version of the model that includes more details for benefits estimation. In the present investigation, sedimentation and evaporation effects of constructing hydropower dams are added to previous cost estimation factors to upgrade the HECAM model to HECAM II. Bakhtiari hydropower dam (located in Lorestan province in Iran) is employed as a case study to verify the new model. The results showed that the total cost and revenue, as well as the benefit to cost ratio, were 79.13 US$/MWh, 203 US$/MWh, and 2.57, respectively. The new HECAM II model showed that the operation of Bakhtiari Dam would alleviate the socio-environmental doubts through a long-term plan in the region.

Avoided external energy costs due to penetration of renewables: Evidence form Baltic States

European Union (EU) has set ambitious energy and climate targets for the EU Member States. Some EU Member States (MS) confirmed to attain 100% of renewables in power generation by 2050 and implement carbon-free economy target. The purpose of this study is to assess and compare the avoided external costs of electricity generation due to the penetration of renewables in the Baltic States by implementing EU energy and climate targets for 2020, 2030 and 2050. The switching to renewables has significant social benefits for the EU member states, as fossil fuel burning is linked with the climate change and emission of classical air pollutants (SO2, NOx, particulate matter, NH3, NMVOC), which can have various negative impacts on the human health. The analysis and forecasts of external costs of power generation by 2050 in the selected countries, i.e., the Baltic States, has shown that Estonia is able to achieve the highest avoided external costs and highest health benefits from renewable promotion due to the oil shale that is dominating in the power generation structure. The main input of this study performed in the Baltic States is to show how subsidies for renewables correspond to the reduction of external costs of power generation and to provide important policy implications for these countries. Moreover, this can be an example for other countries how to assess the benefits of renewables support.

Economics of renewable energy expansion and security of supply: A dynamic simulation of the German electricity market

We explore the impact of renewable energy under free market conditions on the security of energy supply using data for the German electricity market. We design a fundamental electricity market model, where renewable energy capacity is not driven by expansion goals, but is dynamically modeled as an economically-driven investment option. Furthermore, we analyze the economics of five policy scenarios designed to secure both electricity supply and renewable energy expansion. Our analysis demonstrates that renewable energy expansion leads to conventional power plant shut-downs (due to economic losses) and, as a result, to energy shortages. We find that the application of a fixed feed-in tariff mechanism for renewable energy (i.e. a fixed payment for the provided energy) is an appropriate instrument to simultaneously achieve renewable energy expansion and uninterrupted energy supply. However, when internalizing the external costs of electricity generation, the scenario of a free market for renewable energy together with subsidies for conventional power plants becomes the most cost efficient option.

Modeling the Use of Renewable Energy Sources for Electricity Generation Based on Technological, Political, and Environmental Constraints

Turkey electricity sector has been facing a dramatic increase in demand in the last decade. The CO2 emission reduction targets and limiting the use of imported fossil fuels put a strain on the fuel mixture planning of electricity sector. In this study, least cost electricity generation based on various fuel mixtures with and without external costs are determined while achieving an optimal solution for emission reduction targets or keeping the fuel share as it was in the base year (business as usual, BAU). The optimization is developed between 2016 and 2035 using ANSWER-TIMES energy planning simulation program taking 2015 as the base year. The results show that by internalizing external costs renewable energy power plants are promoted in long term. The fossil fueled power plants are primarily preferred to meet the demand when the external costs of electricity generation are not considered during optimization. The scenario results also presented that the total discounted costs increase by 4% for CO2 mitigation scenario relative to BAU scenario when external costs are not considered in optimization. However, total discounted system costs are increased by about 30% for both CO2 mitigation and BAU scenarios when external costs are considered in optimization. The scenario results also presented that the CO2 emissions can be reduced by about 30% when optimizations are performed considering the external costs and emission targets.

The social and economic consequences of the fossil fuel supply chain

ABSTRACT

External costs of electricity generation options in Lithuania

This article deals with external cost of electricity generation in Lithuania. The external costs of electricity generation are the most important environmental criteria shaping decisions within the electricity system. External costs of electricity generation were calculated based on ExternE methodology for Lithuania during EU (European Union) Framework 6 project Cost Assessment for Sustainable Energy Systems (CASES). The article presents the methodology and results of external costs of electricity generation in Lithuania. The assessment of external costs provided that future energy policy should be oriented towards the renewable energy generation technologies having the lowest external costs. External costs for electricity generation technologies were analysed in terms of external costs categories, electricity generation technologies life cycle stages and time frame 2010–2030.

A sustainability analysis of an incineration project in Serbia

The only option for municipal solid waste (MSW) treatment adopted so far in Serbia is landfilling. Similarly to other south-eastern European countries, Serbia is not recovering any energy from MSW. Fifty percent of electricity in Serbia is produced in coal-fired power plants with emission control systems dating from the 1980s. In this article, the option of MSW incineration with energy recovery is proposed and examined for the city of Novi Sad. A sustainability analysis consisting of financial, economic and sensitivity analyses was done in the form of a cost-benefit analysis following recommendations from the European Commission. Positive and negative social and environmental effects of electricity generation through incineration were valuated partly using conversion factors and shadow prices, and partly using the results of previous studies. Public aversion to MSW incineration was considered. The results showed that the incineration project would require external financial assistance, and that an increase of the electricity and/or a waste treatment fee is needed to make the project financially positive. It is also more expensive than the landfilling option. However, the economic analysis showed that society would have net benefits from an incineration project. The feed-in tariff addition of only €0.03 (KWh)(-1) to the existing electricity price, which would enable the project to make a positive contribution to economic welfare, is lower than the actual external costs of electricity generation from coal in Serbia.

A consumption-based indicator of the external costs of electricity

Economic activities often result in external costs which are not included in the current pricing system. Due to these external costs, the standard market mechanism fails to maximize social welfare. Therefore, it is necessary to provide decision makers with proper indicators which enable them to make decisions which reflect proper consideration of the total costs of economic activities and amelioration of social welfare. In recent years recognition and responsibility for the external costs and their internalization have become an important policy issue. The external costs of electricity generation are mainly caused by the acidifying substances, airborne particles and greenhouse gas emissions. Impacts of these pollutants on the environment and society should not be overlooked. A quantification of these impacts in monetary terms has become the core of many research projects and their results provide relevant indicators for policy. In this article, we build upon the current ExternE method in order to quantify the external costs of electricity generation and transform the results into the external costs of electricity consumption. In our case study of 21 European countries we show that the currently used indicator of the external costs of electricity generation is not appropriate for communicating and monitoring the external costs of electricity due to the international trade in electricity. As an alternative we propose and quantify the external costs of electricity consumption, which deals with the effect of international trade in electricity.

External costs from electricity generation of China up to 2030 in energy and abatement scenarios

This paper presents estimated external costs of electricity generation in China under different scenarios of long-term energy and environmental policies. Long-range Energy Alternatives Planning (LEAP) software is used to develop a simple model of electricity demand and to estimate gross electricity generation in China up to 2030 under these scenarios. Because external costs for unit of electricity from fossil fuel will vary in different government regulation periods, airborne pollutant external costs of SO 2, NO x , PM 10, and CO 2 from fired power plants are then estimated based on emission inventories and environmental cost for unit of pollutants, while external costs of non-fossil power generation are evaluated with external cost for unit of electricity. The developed model is run to study the impact of different energy efficiency and environmental abatement policy initiatives that would reduce total energy requirement and also reduce external costs of electricity generation. It is shown that external costs of electricity generation may reduce 24–55% with three energy policies scenarios and may further reduce by 20.9–26.7% with two environmental policies scenarios. The total reduction of external costs may reach 58.2%.

Identification of Options and Policy Instruments for the Internalisation of External Costs of Electricity Generation. Dissemination of External Costs of Electricity Supply Making Electricity External Costs Known to Policy-Makers MAXIMA

In the present paper, after reviewing the results of the ExternE project and its follow-up stages in the estimation of the external costs of electricity production, we look at the policy instruments for the internalisation of such costs. Emphasis is given to subsidies, such as feed-in tariffs, competitive bidding processes and tradable green certificates to stimulate the use of renewables in the production of electricity. When policy-makers are asked to choose the instrument(s) to internalise the externalities in the electricity production, they have to find a solution that gives the best outcome in terms of efficiency, cost minimisation, impact on the job market, security of energy supply, equity of the instrument, technological innovation, certainty of the level of the internalisation, and feasibility. The choice of the instrument will require some trade-offs among these criteria. Conjoint choice analysis can help in investigating how stakeholders and policy makers trade off the criteria when choosing a policy for the internalisation of the externalities. In this paper we present the first results of a questionnaire that employs conjoint choice questions to find out how policy makers and stakeholders of the electricity market trade off some socio-economic aspects in the selection of the policy instruments for the internalisation of the externalities. The results of this first set of interviews will be useful for further research.

Environmental damage costs from fossil electricity generation in Germany and Europe

While studies on external costs of electricity generation generally aim at the calculation of marginal costs for a new increment of power generation, we have applied an extended bottom-up modelling framework to calculate average health and environmental damage costs from fossil electricity generation in Germany and Europe. Aggregated average damage costs provide helpful complementary information to site and technology specific ‘point’ values to be used for more general policy analysis. Environmental damage costs caused by fossil fired power plants in the EU-15 countries in 1990 amount to about 70 billion US $. Results show that damage costs per tonne of pollutant emitted might vary considerably by site and – as structural changes like those observed in the eastern part of Germany after the re-unification show – also over time. A comparison of damage costs and private costs of emission reduction measures in large combustion plants shows that on the European average the implementation of current best available emission reduction technologies is well justified.

The United Kingdom demand for renewable electricity in a liberalised market

This paper analyses how the liberalisation of the UK electricity market in 1998 may encourage demand for renewable electricity through pricing and informational incentives. The analysis argues that prices and beliefs will be crucial for influencing customers’ willingness to pay for environmental costs associated with electricity generation, as well as their decision to not just buy the cheapest electricity. In 1998, when UK electricity markets are liberated, a small price differential between renewable and standard electricity – certainly less than 20% – and clear, credible and captivating information about the external costs of electricity generation could create a considerable demand for renewable electricity. But, because renewable generating capacity will initially be small and slow to adjust to incentives, initially high demand may drive up prices, discouraging customers from wanting to buy renewable electricity. Low demand, on the other hand, will not provide the incentives to invest new capacity, which probably means that renewable technology will not be able to reduce its unit costs of electricity generation and compete in a liberalised market without continued financial support. To avoid either scenario, this paper recommends that Government should extend the non-fossil fuel obligation (NFFO) to promote investment in renewable technology, provide tax incentives to minimise the price differential between renewable and standard electricity, encouarge non-governmental organisations to develop schemes for providing customers with clear, consistent and reliable information about sources of renewable electricity, and stagger the introduction of electricity liberalisation. While the analysis is of a speculative nature, such policies may create incentives for markets to reduce environmental damage associated with electricity generation.

The External Costs of Electricity Generation: An "Insider's" Perspective on the Lessons from the US Experience

A paper recently published in this journal, 'The External Costs of Electricity Generation: Lessons from the US Experience' (Martin, 1995), gives an interesting perspective on recent developments in methods for estimating externalities in the electricity sector and on internalising these externalities through environmental regulation. This interesting paper motivated me to set the record straight, from my perspective as one who was part of the US experience.

The monetary valuation of the health and environmental impacts of the nuclear fuel cycle / Die finanzielle Bewertung der mit dem nuklearen Brennstoffkreislauf verbundenen Folgen für Gesundheit und Umwelt

From 1991 to 1995, the ExternE project, part of the European Commission's (DG XII) 'Joule Programme', began the process of better integrating the health and environmental external costs of electricity generation, that were not traditionally included in the energy policy making process. During the first phase, the methodologies were developed to tackle the difficult task of evaluating and monetizing the impacts of the different energy systems. This was followed by national implementation projects to complete the assessment of all relevant fuel cycles analyses in the European Union member states. In this paper, the methodology and the results of the studies of the nuclear fuel cycle, developed by the French Centre d'etude sur l'Evaluation de la Protection dans le domaine Nucleaire (CEPN), are presented.

96/06125 The external costs of electricity generation: Lessons from the US experience

96/06125 The external costs of electricity generation: Lessons from the US experience

The External Costs of Electricity Generation: Lessons from the US Experience

Some American electric utilities have been required since 1989 to incorporate environmental costs into their assessment criteria of competing projects for a given required capacity. In doing this, their local regulators are trying to reduce the competitive disadvantage faced by DSM programs and renewable-source electricity production. It is obvious, though, that this requirement, other than being heavily criticized, has not produced expected results. Selected values, as well as the existence of an unfavourable bias towards new facilities, have created a number of controversies. Above all, the ongoing reorganization of the Californian electric industry has led to the complete disappearance of this requirement.

External costs of electricity generation

Internalizing of external costs leads to a better allocation of economic resources, and so to an improvement of welfare. However, if the external effects that can be quantified and monetized are added to the internal costs, the cost relations between different electricity generation systems are not necessarily changed. Of course, the underlying assumptions (like dose-response relationships) are very uncertain, and some external effects that could be important cannot be monetized. However, statements of other authors that with certainty quantifiable external effects are high (of the order of magnitude of the internal costs) can be relativized.