Types of External Cost

Before looking more closely at the procedures available, a brief analysis of the make-up of external costs will help explain why they engender controversy. Table 7.4 gives a list of the local and general external costs excluding global warming.

External costs associated with energy supply/use are complicated. For simplification they can be divided into three broad categories:

• hidden costs borne by governments;

• costs of the damage caused to health and the environment by emissions other than CO2;

• the costs of global warming attributable to CO2 emissions.

The first category includes the cost of regulatory bodies and pollution inspectorates (generally small) and the cost of energy industry subsidies and research and development programmes.

Table 7.4 Sources of external cost due to electricity production, excluding global warming

Local General

Smut deposition

Obscuration of the sun by plumes Noise due to plant, coal handling, etc. Noise due to fuel deliveries Discharges into watercourses Plant accidents - human cost Smells

Dust and fumes Heavy metal depositions

Upkeep of emergency evacuation measures (nuclear)

Acid rain damage to trees and crops to buildings to human health to fisheries to animals Oil spillages - clean-up costs Ash disposal accidents Heavy metal depositions Leakage from radioactive waste

These can be very significant. In the ground-breaking analysis of external costs published by the European Commission in 1998 [4], it was calculated that support to the German coal industry added DEM 0.002/kW h to the price of electricity. A cost of DEM 0.0235/kW h was also assigned to nuclear research and development, compared to around DEM 0.004/kWh for wind power.

The second category covers costs due to emissions that cause damage to the environment and/or people. These make up about 10% of the external cost of power generation and include a wide variety of effects, including damage from acid rain and health damage from oxides of sulfure and nitrogen emitted from coal fired power stations. In a European study, ExternE [5], the costs of damage to health were estimated by calculating the loss of earnings and costs of hospitalization of people susceptible to respiratory diseases.

Other costs included in the damage and health category are power industry accidents, whether they occur in coalmines, on offshore oil or gas rigs, or in nuclear plant. The probability of a serious nuclear accident in Western Europe might be extremely low, but should a catastrophic failure occur the costs would be undeniably huge.

The third category is by far the largest: external costs due to greenhouse gas emissions which cause global warming with all its associated effects. This category accounts for some 40-100% of the hidden costs of the world's consumption of electricity. It is also the most contentious area of the external costs debate. The range of estimates for the possible economic implications of global warming is huge. Costs associated with climate changes, flooding, changes in agricultural patterns and other effects all need to be taken into account.

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Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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