ExternE _ The ExternE-Approach for Calculating External Costs – Methodology and Preliminary Results Peter Bickel IER - University of Stuttgart, Germany

ExternE _

The ExternE-Approach for Calculating

External Costs – Methodology and Preliminary Results

Peter Bickel

IER - University of Stuttgart, Germany

NEEDS FORUM 1

Accepting the Real Price for Sustainable Energy

Brussels 24 May 2005

ExternE _

History of ExternE

Project ExternE = Externalities of Energy launched in 1991, financed by the European Commission, DG Research

scope: development of a framework for estimating environmental external costs of power plants

Follow-up projects until now improving and extending the methodology, incorporating new

knowledge extending the field of applications: heat production, transport,

industrial activities, agriculture, waste treatment

ExternE _

For what purpose are estimates of external

costs needed?

to take account of external effects, when making decisions

Technology assessment: comparison of techniques, identification of weak points

Internalising external costs: getting the prices right (taxes), use of other instruments (standards, permits, subsidies …)

Cost-Benefit-Analyses, e. g. for measures and directives to protect the environment and human health

Sustainability and welfare indicator

ExternE _

Basic Concept of the Impact Pathway Approach

• Assessment or weighting of impacts should as far as possible be carried out using quantitative figures and procedures

ensures transparency and reproducibility

• Impacts are expressed in monetary units

allows transfer of values, units are conceivable, direct use of results in CBA and for internalising via taxes possible

however not essential: ‘utility points’ would give the same results

ExternE _

Basic Methodology of the Impact Pathway Approach

This implies:

valuation of physical impacts, not burdens/pressures (e.g. emissions of pollutants)

as impacts depend on time and site of activityBottom-up approach needed: the ‘impact pathway approach’

available information should be explained before measuring preferences

second best option: use of preferences of representatives (elected decision makers)

Basis of assessment: (measured) preferences of the (potentially) affected, well-informed population

ExternE _

The principle Differences of Physical

Impacts

Transport andChemical

Transformation;Noise Propagation

MonetaryValuation

Pollutant/Noise Emission

Calculation is made twice: with and without

project

ExternE _

Illustration: A Fictitious Coal Fired Power

Plant in Janin, China(Reference plant defined in Hirschberg et al. (2003))

• Capacity: 925 MW

• Electricity sent out: 860 MW

• Full load hours per year: 5469 h

• Stack height: 220m

• SO2 emissions: 3.8 g/Nm3

• NOx emissions: 1.5 g/Nm3

• PM10 emission: 0.5 g/Nm3

ExternE _

Jinan power plant

Location and Population Distribution

ExternE _

Jinan power plant

Change in Concentration: PM10

ExternE _

Exposure Response Function:

Number of new case of chronic bronchitis

= 4.9 · 10-5 · PM10 · Population

Additional cases of chronic bronchitis due to one TWh

electricity produced in the fictive exemplary power plant

due to primary and secondary particles: 710

Quantification of impacts and costs (I)

ExternE _

Impacts included (I)Impact Category Pollutant / Burden Effects

Human Health – mortality

PM10 SO2, O3

Benzene, BaP, 1,3-butad., Diesel part., radioactive subst. Noise Accident risk

Reduction in life expectancy due to short and long time exposure Reduction in life expectancy due to short time exposure Reduction in life expectancy due to long time exposure Reduction in life expectancy due to long time exposure Fatality risk from accidents (road, mining, nuclear,…)

Human Health – PM10, O3, SO2 Respiratory hospital admissions morbidity PM10, O3 Restricted activity days PM10, CO Congestive heart failure Benzene, BaP, 1,3-

butad., Diesel part. Cancer risk (non-fatal)

PM10 Cerebrovascular hospital admissions, cases of chronic bronchitis, cases of chronic cough in children, cough in asthmatics, lower respiratory symptoms

O3 Asthma attacks, symptom days Noise Myocardial infarction, angina pectoris, hypertension, sleep

disturbance Accident risk Risk of injuries from traffic and workplace accidents

ExternE _

Impacts included (II)

Impact Category Pollutant / Burden Effects Building Material SO2, Acid

deposition

Combustion particles

Ageing of galvanised steel, limestone, mortar, sand-stone, paint, rendering, and zinc for utilitarian buildings

Soiling of buildings

Crops SO2 Yield change for wheat, barley, rye, oats, potato, sugar beet

O3 Yield change for wheat, barley, rye, oats, potato, rice, tobacco, sunflower seed

Acid deposition Increased need for liming

N, S Fertilising effects

Global Warming CO2, CH4, N2O, N, S

World-wide effects on mortality, morbidity, coastal impacts, agriculture, energy demand, and economic impacts due to temperature change and sea level rise

Amenity losses Noise Amenity losses due to noise exposure

Ecosystems Acid deposition, nitrogen deposition

Acidity and eutrophication (change in area where critical loads are exceeded)

ExternE _

Quantification of impacts and costs (II)

Additional cases of chronic bronchitis due to one TWh

electricity produced in the fictive exemplary power plant

(primary and secondary particles): 710 /TWhel

Monetary value (transferred using PPP adjusted income):

24 200 € per case of chronic bronchitis

Damage costs of cases of chronic bronchitis per kWh

electricity: 0.23 €-Cent per KWh

ExternE _

Monetary Valuation

Health effects Monetary value (€ 2000)Value of a prevented fatality (VPF) 1,040,000

Year of life lost (chronic effects – long time exposure) 50,000

Cerebrovascular hospital admission 16,730Respiratory hospital admission 4,320Congestive heart failure 3,260Chronic cough in children 240Restricted activity day 110Asthma attack 75Cough 45Minor restricted activity day 45Symptom day 45Bronchodilator usage 40Lower respiratory symptom 8

ExternE _

Marginal damage costs:

• 2,4 €2000 per t CO2 (ExternE 2000) – median value/ large range (ca. 0,1 to 16 € per t of CO2 in ExternE; up to 165 € per t of CO2 in other studies)

Marginal avoidance costs for EU-Kyoto aim -8% CO2eq. 2008-2012 compared to 1990

• ca 20 € per t CO2eq with emission trading(range ca. 5 – 42 € per t of CO2 )

Assessment of Greenhouse Gas Emissions

ExternE _

Uncertainties of estimations of external costs

Range of results caused by different assumptions and hypotheses (discount rate, model for assessing mortality risks)

sensitivity analysis establish conventions on hypotheses/assumptions to be

used- participative methods involving relevant social groups- guidelines by decision makers

project MAXIMA: aiming at consensusproject HEATCO to propose harmonised guidelines for the

transport sector for DG TREN

recommendations for VSL and discount rates (DG Env)

ExternE _

Site Dependence of Quantifiable External Costs

(Modern Coal Power Plant)

0

1

2

3

4

Spain

Italy UK

Poland

Germ

any

France

Belgiu

m

[Eu

ro-C

en

t / k

Wh

] NMVOC

PM10

NOx

SO2

CO2eq

ExternE _

Quantifiable External Costs of New Power Plants in Germany (near future technologies)

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

WEC_offs

WEC_ons

Hydro

PV-sc-Si

Natural gas CC

Bio-CHP

PAFC

Lignite, IGCC

Coal, IGCC

Coal, PFB

External Costs [Euro-Cent / kWh]

Health impacts Crops Material GHG

ExternE _

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

WEC_offs

WEC_ons

Hydro

PV-sc-Si

Natural gas CC

Bio-CHP

PAFC

Lignite, IGCC

Coal, IGCC

Coal, PFB

External Costs [Euro-Cent/ kWh]

direct - operation indirect - up- and downstream

Quantifiable External Costs of New Power Plants in Germany (near future technologies)

ExternE _

Quantifiable External Costs - Core

19 Euro/t CO2, Nitrates = 0.5 PM10, YOLLchronic = 50.000 Euro

0

1

2

3

4

5

6

WECOffshore

WECOnshore

Hydro PV sc-Si ORC-HKW PAFC Lignite, IGCC Coal, IGCC Coal PFB

Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]

Health impacts Crops Material Climate change

Sites in Germany

ExternE _

Quantifiable External Costs

Sensitivity: 50 Euro/t CO2

0

1

2

3

4

5

6

WECOffshore

WECOnshore


Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]


ExternE _


0

1

2

3

4

5

6

WECOffshore

WECOnshore


Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]


ExternE _


Sensitivity: YOLLchronic = 151.110 Euro

0

1

2

3

4

5

6

WECOffshore

WECOnshore


Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]


ExternE _


0

1

2

3

4

5

6

WECOffshore

WECOnshore


Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]


ExternE _


Sensitivity: Nitrates have no impact on human health

0

1

2

3

4

5

6

WECOffshore

WECOnshore


Ext

ern

al C

ost

s [E

uro

-Cen

t /

kWh

]


ExternE _

Summary

• The Impact Pathway Approach helps to estimate impacts of technologies for energy conversion and to assess them based on preferences of the affected population/environment for a large number of impact pathways.

• The methodology has been widely used for decision aid in the fields of energy conversion, transport and environmental protection.

• Gaps and uncertainties exist, however will be more and more reduced due to ongoing research (e.g. on pathways involving toxic substances, heavy metals, biodiversity, water and soil contamination…).

Documents

ExternE _ The ExternE-Approach for Calculating External Costs – Methodology and Preliminary Results Peter Bickel IER - University of Stuttgart, Germany