improvements on the quantification of external costs

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Improvements on the quantification of external costs

Andrea RicciISIS

External costs of energy and their internalisation in Europe

Bruxelles, 9 December 2005

2/16

Background

Research so far has provided a “usable body of knowledge”

• Increasing awareness• Technology and policy choices (standards, Directives,

extended CBA)• Internalisation

BUT… There are still gaps and needs for

improvement in several areas• Methodologies => better quality and reliability of

external cost data, reduced uncertainties• Coverage => additional technologies, burdens,

impacts, pathways, countries• Practical implementation =>integration into policy

and decision making: LCA, Modelling/scenarios

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Methodological improvements

Atmospheric modelling

•Complexity of physical process (chemical transformation, orography, meteorology, background concentrations)

•Trade off between accuracy (better models) and simplicity (parametrisation)

•Finer representation (modelling) at local level

•Impacts across continents => Hemispheric modelling of airborne pollutants

4/16

Global warming

•Large uncertainty of cost estimates, reflecting Uncertainty of emissions/climate change scenarios Context dependency of impacts (including e.g.

discount rate)•Combined approach: joint use of damage and

avoidance estimates •Better estimation of damage costs

Inclusion of additional sectors (e.g. tourism) Inclusion of additional GHG (SF6, PFCs, HFCs)

•Better estimation of avoidance costs More and better scenarios (socio-economic, policy,

energy sector) Inclusion of additional GHG

Methodological improvements

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Methodological improvements

Mortality and morbidity

• Prevailing weight in damage costs (e.g. air pollution)

• Mainstream approach: Contingent Valuation (CVM) Reliability and accuracy issue Value Of Life Years lost (VOLY) to measure changes in

life expectancy Quality Adjusted Life Years (QALY) to measure morbidity

impact

• More and better surveys Extension of geographical coverage (additional surveys) Additional criteria for transferability (cultural, risk

perception)

6/16

Extension of scope and coverage

Multimedia pathways

•Air Vs soil and water

•Prevailing effects on human health

•Multimedia chains, extension of the impact pathway(s)

•Exposure => food trade and consumption

•Biotransfers (milk, meat, fish)

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Extension of scope and coverage

Biodiversity

• Land use change, land take (power plants, distribution infrastructure), acidification, eutrophication

• Limits of Contingent Valuation (and relevance to energy production)

• Methodological problem: how to measure

• PDF (Potentially Disappeared Fraction)

• Costs of compensation

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Other areas for improvement

Methodologies

• Improvement of Exposure-Response functions

• Generalisation and transferability of external cost values

• Inter-sectoral issues associated to internalisation policies

• …

Scope and coverage

• External costs associated to the security of energy supply

• Extraction and transport (e.g. oil spills)

• …

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Integration into policy and decision making

Long term perspective• Future technologies

10/16

“Future” energy technologies

hydrogen technologies fuel cells offshore wind photovoltaic concentrating solar thermal power plant biomass (including wet) wave energy geothermal …

BUT ALSO…

advanced fossil fuels advanced nuclear …

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Integration into policy and decision making

Long term perspective• Future technologies• Dynamic LCA (time- and scenario-dependent)

12/16

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

….

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

….

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

France

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

France

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

….

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

….

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

fuel cell

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

fuel cell

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

PV

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh2050

2025

2000

Scen CScen BScenaA

SO2

kg/kWh

PV

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

Germany

2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

….

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh2050

2025

2000

Scen CScen BScenaA

NOx

kg/kWh

2050

2025

2000

Scen CScen BScenaA

SO2

€/kg2050

2025

2000

Scen CScen BScenaA

SO2

€/kg

Germany

RS1a RS1b

technology specific external costs per unit electricity generation

(Excel format) (Excel format)

€/kWh

LCA of individual technologies External costs per unit emission

Time dependency

Scenario dependency

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Integration into policy and decision making

Long term perspective• Future technologies

• Dynamic LCA (time- and scenario-dependent)

• Individual technologies Vs policy packages

• Meaningful and credible scenarios

• Improved modelling fully integrating LCA and external costs (better technology representation, energy trade and cross-country harmonisation, impacts of internalisation…)

14/16

The NEEDS Integrated Project (FP6)New Energy Externalities Developments for Sustainability

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Is it worth the effort?

Awareness => orders of magnitude

Technology policy and investment priorities• External costs included in e.g. CBA• Small % variations in cost estimates may induce

different ranking

Internalisation policies• Fair application of the user pays principle requires

maximum accuracy• Avoiding (further) market distortions• Differentiation

YES!

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Thank you for your attention

Andrea Ricci

ISIS – Istituto di Studi per l’Integrazione dei Sistemi – Romaaricci@isis-it.comwww.isis-it.com

www.needs-project.org