Environmental Externalities ofEnergy Options - Basics and

Applications

Y. MatsukiAugust 7, 2009Presented at the Summer Schoolof the NTUU “KPI”

Different energy systems

CoalOilGasNuclearBiomassHydroWindPhotovoltaic

Emissions from coal energy

CO2

Sulphates and nitrates from SO2andNOx emissionsParticulate matter from Primaryparticulate emissionsOzone formed from NOxMiningCoal transport by rail and truck

Impacts of coal energyCO2Climate changeSulphates and nitrates from SO2and NOx emissionsIncreased mortality and morbidityParticulate matter from primary particulate emissionsIncreased mortality and morbidityOzone formed from NOxIncreased morbidity and possibly increased mortality riskMiningIllness from coal dustInjury and deaths from mining accidentsCoal transport by rail and truckInjury and death from accidentsAir pollution from trucksRoad pavement damage

Severity of the impacts of coalenergy

The severest --- !!!Severe, but not as the severest --- !!Severe, but not as the above two --- !

Severity of the impacts of coalenergy

CO2 Climate change!!!Sulphates and nitrates, mortality and morbidity!!!Particulate matter, mortality and morbidity!!Ozone, morbidity and possibly mortality!!Mining, illness from the dust!!Mining, injury and death from accidents!!Coal transport by rail and truck, injury and death from accidents!!Coal transport by truck, air pollution from truck!Coal transport by truck, road pavement damage!

Impacts from oil energyCO2, sulphates and nitrates!!! – same as coalParticulates, ozone!! – same as coalOil importEnergy security costs!!Oil spillDamage to aquatic life!

Impacts from gas energy

CO2, nitrates!!! - Same as coal, but nosalphates, and no particulate matter)Ozone!! – same as coalFacility/pipeline leakageDamage from accidents! to !!Climate change!

Impacts from other energy systemsNuclear: Severe accident, !-!!!Nuclear: Reprocessing, !!Nuclear: Waste disposal, !Biomass: Nitrates from NOx, !!Biomass: Particulate matters, !!Biomass: Ozone, !!Biomass: Feedstock transport, !!Hydro: Land use, ! To !!!Wind: Wind turbine operation, !Photovoltaic: Emissions from material production, !

How such tables were made?

Assessment of health andenvironmental impacts from energysystemsAssessment of damagecost/externality of those systemsSo, actually there are many numbers,pictures and tables, together witharguments behind.

Summary of Cost Estimates in mECU/kWh

Canada France Germany

Pub. Occ. Env.

Gw.

Pub.

Occ. Env. Gw. Pub. Occ.

Env. Gw.

Coal 2.3 nq 53 nq 0.5 29 8.4

Lignite 10.5Oil 69 nq 0.7 16 16.5

NaturalGas

12 nq 0.1 8 3.0

Nuclear 0.01-0.05

2.5 0.07 0 0 3.8

Wind 0.2Hydro

PhotoVoltaic

2.7

Pub. public impactsOcc. occupational impactsEnv. Environmental (buildings, crops, ecosystems,…), excluding global warmingGw. Global warmingnr not reportednq not quantified

Summaryof Cost Estimates in mECU/kWh (continued)Greece US Russia

Pub. Occ. Env. Gw. Pub. Occ. Env.

Gw.

Pub.

Occ. Env. Gw.

Coal 0.521.1

nr

Lignite 20 0.30 0.66 38Oil 10 0.17 0.95 21 0.15

0.21nr

NaturalGas

2.4 0.17 0.66 5.8 0.011

nr

Nuclear 0.170.26

0.4- 4

Wind 0.84 0.09 1.2 0.2

Hydro 1.2 3.8 0 0.14PhotoVoltaic

Pub. public impactsOcc. occupational impactsEnv. Environmental (buildings, crops, ecosystems,…), excluding global warmingGw. Global warmingnr not reportednq not quantified

Why those tables were made?

Electricity Pricing in the USEU expansions in the 1990sPreparation for the expansion ofelectricity market within the EUGrowing concerns on environmentalissues and the global warmingUN sustainable developmentprograms

What will you make, if you havesuch an information with you?

Attract somebody to do something, such asMake the Government and the Publicunderstand the current situationConvince the sponsors to invest moremoney on cleaner energyGuide people to take actions for creatingthe better energy and environmental policyEcology TaxTradable PermissionEmission control devicesAny more new policy, strategy, mechanism

How to use the results?

Distinguishing externalities

Emission of dischargeChange in concentrationImpactDamagesExternalities

Distinguishing externalitiesCO2

Increased concentration of CO2 in atmosphereEstimates are imprecise but impacts are thought toinclude changes in coastal ecosystems and in builtenvironment, changes in agriculture production, andpossible starvation due to increased frequency of floodsand droughtsEconomic value of impactsIn most countries, non of the damages are internalized;thus, all of the damages are externalities

SO2

Formation and dispersion of sulphates, for exampleIncreased risk of morbidity and mortality fromrespiratory problems due to inhalation of sulphatesEconomic value of expected increase in morbidity andmortality. This value includes decreased, or lost, qualityof life, not just medical costs and lost wages orproductivityIn regions without internalization of these damages, theexternality equals the damages. In the USA, with tradingof SO2 emission permits, an indeterminate portion of thedamages is internalized.

Radio-nuclides (in the event of a nuclear power plantaccident)Increases in radionuclide concentrations for thousandsof kilometersIncreased risk of morbidity and mortality from certaincancersEconomic value of expected increase in cancersIn the USA, a portion of the damages is internalizedthrough the Price-Anderson Act

Noise from wind turbinesIncrease in noise levels at locations nearwind farmUndesirable effects on auditory sensesWillingness of individuals to pay to avoidnoise, e.g. through real estate prices ofland near wind farmAll of these damages are externalitiesbecause there is no market mechanism thatinternalizes them

Reduced flow of waterfall caused by damReduced flow of waterfall caused by damReduced visual aesthetics of waterfallEconomic value of reduced aesthetics, e.g.as estimated in a contingent valuationstudy of individuals’ willingness to payNone of the damages are internalized;thus, all of the damages are externalities

How to internalize it

Name of the impact and damageWay in which damages areinternalizedExamples

How to internalize it

Occupational injury, including longterm health effectsWages and health insuranceSome portion of the increased risks ofmining is internalized in higher wagesand in medical insurance benefitsprovided by employers, who thenpass these added costs to the buyerof the fuel

Damage to aquatic life from mine runoffRegulations that set standards on allowabledischargesMany countries have water regulations.However, these regulations may over orunder regulate from an efficiencystandpoint. Also, if there is non compliance,externalities could occur.

Human health effects from air polltutionRegulations on discharges and/or onmaximum local concentrationNational Ambient Air Quality Standards inthe USA and similar regulations in manyother countries. These regulations reducethe externalities. However, standards areno easy solution for eliminatingexternalities.

Effects of global climate change dueto CO2

TaxesNorway, for example, has carbontaxes

Damage from oil spillsPayments of finesIn the USA, the Oil Pollution Actrequires the responsible party to paythe cost of an oil spill. In the case ofa small oil spill, the responsible partymay not be known, so the damageswould not be internalized.

Effects of nuclear power plantaccidentInsurance requirementsIn the USA, the Price-Anderson Actrequires utilities to carry insurancethat covers them, to a limit, in theevent of a nuclear power plantaccident

Ecological and human health effects fromSO2 emissionsTradable emission permitsIn the USA, there is trading of SO2 emissionpermits. Also, there is trading of NOxemission permits in southern California.Trading does not completely internalizeexternalities because their magnitudedepends on the location of the emissionsand the affected environment andpopulation. Also, emission caps are notalways set at their most efficient level.

All typesVoluntary installation of pollutionabatement equipmentMany electrical utilities install scrubbers,electrostatic precipitators, etc. Plantoperators may not voluntarily installpollution abatement equipment because itincreases their costs. Alternatively, theymay install equipment as a hedge againstfuture, more stringent regulations.

If you want to start it, what youhave now?

Method to learnComputer codes to make wide rangeof the assessment

PM10, SO2, NOx, salfates, nitratesGlobal warmingDamage cost, external cost, externality

Examples from elsewhereA few examples with NaUKMAstudents

What is “externality”?

Values that are not included in the market priceof electricityDamages to Human health (death, injury,illness)Damages to Biological resources(crops/vegetation, forests, fisheries, aquatic,terrestrial, groundwater)Climate change, visibilityPolicy needed to secure energy supply

What else will be shown now?

How to calculate how many peopledie many years after by the airpollutionHow to calculate the Grivna/Euroequivalent monetary value for thosedeaths

Top issue

Loss of life expectancy for chronicmortality from particles[Dockery et al 1993, Pope et al 1995]have found positive correlationsbetween exposure to particles andtotal mortality

How can you calculate the externalities?

How to calculate the monetaryvalue of the health impacts

D= (x)·f(x,C(x,Q))·Uv(x) dximpact of Area

D: damage cost (Euro, US dollars, UAH)(x): population density (person/m2)

f(x,C(x,Q)): Exposure-Response Functioncases/(year.person. g/m3)

Uv(x): unit cost (Euro/cases)C(x,Q): Concentration of the pollution ( g/m3)Q: Emission of the pollution ( g/year)x: Distance from the emission source (m)

That’s it?

No.What’s been shown is the basicmethod for students.Then, what comes next?The next comes with the nationalcase study,Really?

Can we really make the UkraineCase Study?

We do have emission data frompower plants from this yearAnd, we have the methodology toassess the external costs.

Olga Brondzya’s Thesis

Trypilska Power Station in UkrainkaUsing SimPact Computer Code for 50km distance + 1000 km distanceUkraine region

EmissionsTrypilska Power Station in Ukrainka

Pollutants Tons/year

PM10 21,951(50 % of TSP emission10,975 tons/year)

NOx 11,108

SO2 40,910

Map around Ukrainka (<50km)

Simplified Gaussian Plume Model in SimPactfor 50 km radius

Uniform World Model

Damage Cost total in UAH

With Ukrainian Unit Cost:= 0.30 UAH/kWh

Electricity price 0.2872 UAH/kWhIs it externality?

:( yet we don’t know….

The bigger power plants in UkraineThe different populations and theirdistributions in the other cities andthe regionsPeople’s Willingness to Pay for theirlives, in different regions, ages,education levels, incomes,orientations….

What do you think about those?

Ukraine-specific externalities,from the recent news topics

Coal powerAccident record of coalminesRehabilitation of old facilitiesGlobal warmingNuclear power

Social rehabilitation after Chernobylaccident

People’s perceived risk

Energy supply policy and politics

Issues in Ukraine

Is coal energy cheap?Delayed respiratory diseaseHow can the people’s perception of therisk be internalized?Expert risk vs. public perception

How large is the externality to importenergy?

Economic rent of the cartelMarket disruption

General ways by which damagescan be internalized in the prices

Occupational injury – wages and healthinsuranceHuman health effect from air pollution –Regulations on discharge or localconcentrationEcological and human health effects fromSO2 – Tradable emission permitsDamage to aquatic life from mine runoff –regulationsGlobal climate change – taxesAll types – pollution abatement equipment

Available Learning ResourceGuideline documents

IAEA (1999), “Health and environmental impactsof electricity generation systems: procedures forcomparative assessment”, IAEA TechnicalReport Series No. 394

Computer softwareSimPact by the IAEAEcoSence by the ExternE (Stuttgart U.)

Previous projects and the reportsExternEORNL/RFFIAEA

ConclusionsExternalities of energy generation systemsare proven to be significant.There is a developed methodology tocalculate energy externalities, withtransparent and verifiable step by stepapproach.Regarding some additional externalities inUkraine (on energy security, coal power, people’sperception upon the catastrophic accident), thenecessity to calculate and include them intothe price of electricity is very strong.