Environment and health - external costs

Conventional power generation technologies are associated with a number of health and environmental costs – external costs in economic terms - which are not calculated into the electricity price. Examples are pollution, global warming and health problems. The external costs are a strong argument for using renewable energy.

 

1-2% of EU’s GDP

The cost of producing electricity on the basis of coal and oil would on average be doubled and the cost of gas based production increased by 30% in the EU if external costs were included in the electricity prices. This is the main conclusion in the ExternE research project from the EU Commission on  external costsassociated with different energy technologies.

 

External costs can not be found on the consumer electricity bills, but are paid by society in the form of increased health costs, work accidents, work related health hassards, respiratory problems, pollution of the environment, climate change related cost etc. Total external cost (not including climate related costs) estimates are 1-2% of the EU countries combined GDP – equivalent to 85-170 billion euro (in 2001 prices). In addition, the research project concludes that wind power has the lowest external costs of all energy technologies – approx. 0.1 eurocent/kWh compared to 4-7 eurocent/kWh for coal and brown coal in Denmark.

 

Environmental premium – an alternative to energy tax

Ideally, external costs should be included in a common energy tax system in the EU. In reality however, this is not feasible, because it would double the price of coal and this would be both socially and politically unacceptable. Alternatively, the Danish Wind Industry Association, advocates for support of the less polluting technologies through some sort of environmental premium like in Denmark and a number of other countries.