Abstract
Electricity production has negative environmental effects. These effects cause costs (environmental costs) that are not considered in the calculation of the cost of electricity production. This study aimed to investigate the technical, environmental, and economic effects of internalizing these costs in total generation electricity costs. Accordingly, using historical data and the economic method of benefit transfer, the environmental costs associated with various methods of electricity generation were calculated for the environmental effects of existing power plants per kilowatt-hour of electricity generated. Then, the obtained costs were internalized into private electricity generation costs using mathematical modeling MATLAB software. The results showed that the environmental costs ranged from 0.052 to 0.135 C$/kwh in thermal power plants. Even though these costs were also present in renewable and clean energy power plants, they were relatively low. Also, internalizing these costs can change the electricity supply basket, with a predicted increase of 1.9% and 1.0%, respectively, in 2030 and 2050 in the share of clean and renewable technologies and decrease in fossil energy plants such as diesel. From 2017 to 2050, fossil fuel consumption is expected to decline by about 124 billion m3 of natural gas equivalent, along with 136 MTCO2E reduction in pollutant and GHGs emission. Furthermore, the overall cost of producing electricity will decrease by 6337 billion dollars. Finally, it was found that the internalization of environmental costs would shift production away from power plants with higher investment costs and toward those with lower investment costs. However, thermal power plants, which produce an average of 85% for most electricity production. This is mainly due to other production costs, existing policies, and limitation on other sources of electricity production.
Graphical Abstract
Highlights
-
Environmental external costs of all types of thermal power plants are higher than those of renewable and clean power plants
-
Internalizing environmental external costs in the total cost of electricity production increases the share of renewable and clean power plants in electricity production.
-
Internalizing environmental costs is expected to reduce greenhouse gas emissions and fossil fuel consumption significantly.
-
Modeling the internalization of environmental costs is an efficient way to compare the technical, economic, and environmental performance of various electricity generation technologies and their current performance.
Similar content being viewed by others
Data Availability
The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.
Abbreviations
- CO2 :
-
Carbon dioxide
- Kwh:
-
Kilowatt-hour
- Gwh:
-
Gigawatt-hour
- MW:
-
Megawatt
- Inv:
-
Investment cost
- FO&M:
-
Fixed operation and maintenance cost
- VO&M:
-
Variable operation and maintenance cost
- CF:
-
Capacity factor
- EFF:
-
Efficiency
- LOLE:
-
Loss of load expectation
- WTP:
-
Willingness to pay
- GDP:
-
Gross domestic product
- MATLAB:
-
Matrix laboratory
- GLPK:
-
GNU linear programming kit
- GT:
-
Gas turbine
- NGCC:
-
Natural gas combined cycle
- WHR:
-
Waste heat recovery
- MTCO2E:
-
Million tones CO2 equivalent
- PP:
-
Power plant
- GHGs:
-
Greenhouse gasses
References
Abbas N, Kalair AA, Khan N (2015) Review of fossil fuels and future energy technologies. Futures 69:31–49. https://doi.org/10.1016/j.futures.2015.03.003
Aboumahboub T, Brecha RJ, Shrestha HB, Fuentes U, Geiges A, Hare W, Gidden MJ (2020) Decarbonization of Australia’s energy system: integrated modeling of the transformation of electricity, transportation, and industrial sectors. Energies 13(15):3805. https://doi.org/10.3390/en13153805
Apt J, Keith DW, Morgan MG (2007) Promoting low-carbon electricity production. Issues Sci Technol 23(3):37–43
Ardestani M, Shafie-Pour M, Tavakoli A (2017) Integration of green economy concept into fossil fuels (production and consumption: Iran). Environ Energy Econ Res 1(1):1–14. https://doi.org/10.22097/eeer.2017.46453
Aryanpur V, Atabaki MS, Marzband M, Siano P, Ghayoumi K (2019) An overview of energy planning in Iran and transition pathways towards sustainable electricity supply sector. Renew Sustain Energy Rev 112:58–74. https://doi.org/10.1016/j.rser.2019.05.047
Barbir F, Veziroǧlu TN, Plass HJ Jr (1990) Environmental damage due to fossil fuels use. Int J Hydrogen Energy 15(10):739–749. https://doi.org/10.1016/0360-3199(90)90005-J
Bickel P, Friedrich R, Droste-Franke B, Bachmann T, Greßmann A, Rabl A, Tidblad J (2005) ExternE: externalities of energy: methodology 2005 update. Office for Official Publications of the European Communities, Luxembourg
Bielecki A, Ernst S, Skrodzka W, Wojnicki I (2020) The externalities of energy production in the context of development of clean energy generation. Environ Sci Pollut Res 27:11506–11530. https://doi.org/10.1007/s11356-020-07625-7
Bohi DR, Toman MA (1993) Energy security: externalities and policies. Energy Policy 21(11):1093–1109. https://doi.org/10.1016/0301-4215(93)90260-M
Bygrave S, Ellis J (2003). Policies to Reduce Greenhouse Gas Emissions in Industry. Successful Approaches and Lessons Learned. Workshop Report
Chang CC, Carballo CFS (2011) Energy conservation and sustainable economic growth: the case of Latin America and the Caribbean. Energy Policy 39(7):4215–4221. https://doi.org/10.1016/j.enpol.2011.04.035
Dargahi H, Bahrami Gholami M (2012) The GHGs emissions determinants in selected OECD and OPEC countries and the policy implications for Iran:(panel data approach). J Iran Energy Econ 1(1):73–99
Di Sbroiavacca N, Nadal G, Lallana F, Falzon J, Calvin K (2016) Emissions reduction scenarios in the Argentinean energy sector. Energy Econ 56:552–563. https://doi.org/10.1016/j.eneco.2015.03.021
Ediger VŞ, Hoşgör E, Sürmeli AN, Tatlıdil H (2007) Fossil fuel sustainability index: an application of resource management. Energy Policy 35(5):2969–2977. https://doi.org/10.1016/j.enpol.2006.10.011
EIA (2022) Electricity explaind, Electricity and the environment. https://www.eia.gov/energyexplained/electricity/electricity-and-the-environment.php
El-Kordy MN, Badr MA, Abed KA, Ibrahim SM (2002) Economical evaluation of electricity generation considering externalities. Renew Energy 25(2):317–328. https://doi.org/10.1016/S0960-1481(01)00054-4
EN35 External costs of electricity production (2008) European Environment Agency. https://www.eea.europa.eu/data-and-maps/indicators/en35-external-costs-of-electricity-production-1#tab-figures-supporting-this. Accessed 10 June
EN35 External costs of electricity production (2015) https://www.eea.europa.eu/data-and-maps/indicators/en35-external-costs-of-electricity-production-1#tab-figures-supporting-this. Accessed 4 March
Eurelectric (2018) Decarbonisation Pathways, (No. D/2018/12105/45, Part2). European power sector. https://cdn.eurelectric.org/media/3558/decarbonisation-pathways-all-slideslinks-29112018-h-4484BB0C.pdf
EuroKAlert (2007) CGD ranks CO2 emissions from power plants worldwide. https://www.eurekalert.org/news-releases/595640
European Union. European Commission. Directorate-General for Research (2003) External Costs: Research results on socio-environmental damages due to electricity and transport. Office for Official Publications of the European Communities
Fouladi Fard R, Naddafi K, Yunesian M, Nabizadeh Nodehi R, Dehghani MH, Hassanvand MS (2016) The assessment of health impacts and external costs of natural gas-fired power plant of Qom. Environ Sci Pollut Res 23:20922–20936. https://doi.org/10.1007/s11356-016-7258-0
Fouquet R, Slade R, Karakoussis V, Gross R, Bauen A, Anderson D (2001). External costs and environmental policy in the United Kingdom and the European Union. Occasional paper. 3
Friedrich R (2001) Environmental external costs of transport. Springer Science & Business Media. https://doi.org/10.1007/978-3-662-04329-5
Friedrich R, Voss A (1993) External costs of electricity generation. Energy Policy 21(2):114–122. https://doi.org/10.1016/0301-4215(93)90133-Z
The World Bank (2019) GDP deflator: linked series (base year varies by country)-European union. The World Banks. https://data.worldbank.org/indicator/NY.GDP.DEFL.ZS.AD?locations=EU
Gençer E, Torkamani S, Miller I, Wu TW, O’Sullivan F (2020) Sustainable energy system analysis modeling environment: analyzing life cycle emissions of the energy transition. Appl Energy 277:115550. https://doi.org/10.1016/j.apenergy.2020.115550
Gerlitzky M, Friedrich R, Unger H (1986) Environmental effects of thermal power plants (No. IKE–8–15). Stuttgart Univ, Germany
Hainsch K, Burandt T, Löffler K, Kemfert C, Oei PY, von Hirschhausen C (2021) Emission pathways towards a low-carbon energy system for Europe: a model-based analysis of decarbonization scenarios. Energy J. https://doi.org/10.5547/01956574.42.5.khai
EIA (2015) International energy data and analysis of Iran. U.S. Energy Information Administration. http://www.eia.gov/beta/intrnational/country.cfm?iso=IRN
IPCC (2019) Global Warming of 1.5◦C. World Meteorological Organization: Genoba, Switzerland. https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf
Index mundi (2019) Iran-Inflation, GDP deflator (annual %). Index mundi. https://www.indexmundi.com/facts/iran/indicator/NY.GDP.DEFL.KD.ZG
Jorli M, Van Passel S, Sadeghi Saghdel H (2018) External costs from fossil electricity generation: a review of the applied impact pathway approach. Energy Environ 29(5):635–648. https://doi.org/10.1177/0958305X18761616
Kåberger T (2018) Progress of renewable electricity replacing fossil fuels. Global Energy Interconnect 1(1):48–52. https://doi.org/10.14171/j.2096-5117.gei.2018.01.006
Kargari N, Mastouri R (2010) Comparison of greenhouse gas emissions in different power plants using LCA approach. Irans Energy 13(2):67–78
Kargari N, Mastouri R (2011) Effect of nuclear power on CO2 emission from power plant sector in Iran. Environ Sci Pollut Res 18:116–122. https://doi.org/10.1007/s11356-010-0402-3
Karkour S, Ichisugi Y, Abeynayaka A, Itsubo N (2020) External-cost estimation of electricity generation in G20 countries: Case study using a global life-cycle impact-assessment method. Sustainability 12(5):2002. https://doi.org/10.3390/su12052002
Khan AN, Nadeem MA, Hussain MS, Aslam M, Bazmi AA (2020) A forecasting model approach of sustainable electricity management by developing adaptive neuro-fuzzy inference system. Environ Sci Pollut Res 27:17607–17618. https://doi.org/10.1007/s11356-019-06626-5
Klaassen G, Riahi K (2007) Internalizing externalities of electricity generation: an analysis with MESSAGE-MACRO. Energy Policy 35(2):815–827. https://doi.org/10.1016/j.enpol.2006.03.007
Koomey J, Krause F (1997) Introduction to environmental externality costs. CRC Handbook on energy efficiency in 1997, vol 1. CRC Press Inc., pp 35–94
Kosugi T, Tokimatsu K, Kurosawa A, Itsubo N, Yagita H, Sakagami M (2009) Internalization of the external costs of global environmental damage in an integrated assessment model. Energy Policy 37(7):2664–2678. https://doi.org/10.1016/j.enpol.2009.02.039
Kumar S, Katoria D, Sehgal D (2013) Environment impact assessment of thermal power plant for sustainable development. Int J Environ Eng Manag 4(6):567–572
Kusumadewi TV, Winyuchakrit P, Limmeechokchai B (2017) Long-term CO2 emission reduction from renewable energy in power sector: the case of Thailand in 2050. Energy Procedia 138:961–966. https://doi.org/10.1016/j.egypro.2017.10.089
Lee YS, Tong LI (2011) Forecasting energy consumption using a grey model improved by incorporating genetic programming. Energy Convers Manage 52(1):147–152. https://doi.org/10.1016/j.enconman.2010.06.053
Longden T, Beck FJ, Jotzo F, Andrews R, Prasad M (2022) ‘Clean ‘hydrogen?–Comparing the emissions and costs of fossil fuel versus renewable electricity-based hydrogen. Appl Energy 306:118145. https://doi.org/10.1016/j.apenergy.2021.118145
Machol B, Rizk S (2013) Economic value of US fossil fuel electricity health impacts. Environ Int 52:75–80. https://doi.org/10.1016/j.envint.2012.03.003
Majdzdeh TS, Hadian E, Zibaei M (2016) Determining proper subsidy to renewable energy in Iran: a Hybrid approach of CGE model. Iranian Ene Econ 5(17):129–167. https://doi.org/10.22054/jiee.2016.7172
Majumdar A, Deutch J (2018) Research opportunities for CO2 utilization and negative emissions at the gigatonne scale. Joule 2(5):805–809. https://doi.org/10.1016/j.joule.2018.04.018
Marion J, Nsakala NY, Griffin T, Bill A (2001, May). Controlling power plant CO2 emissions: a long-range view. In 1st National Conference on Carbon Sequestration, Washington, DC (Vol. 15, p. 17)
MathWorks (2021) MATLAB documentation. https://de.mathworks.com/help/matlab/release-notes.html
Ministry of energy (2022) Monthly report of water and electricity industry statistics
Ministry of energy, Statistics and information network (2018) Energy balance sheet of 2017
Motahari SAA, Ahmadian M, Abedi Z, Ghaffarzadeh HR (2014) Economic evaluation of wind power development in Iran considering the effect of energy price liberalization policy. Iranian Ene Econ 3(10):179–200
Mousavi Reineh SM, Sadatinejad SJ (2020) Calculation of environmental costs of electricity generation (case study of thermal power plants in Tehran). Urban Econ Plan 1(4):198–205. https://doi.org/10.22034/UE.2020.09.04.01
Munawer ME (2018) Human health and environmental impacts of coal combustion and post-combustion wastes. J Sustain Min 17(2):87–96. https://doi.org/10.1016/j.jsm.2017.12.007
Nabernegg S, Bednar-Friedl B, Muñoz P, Titz M, Vogel J (2019) National policies for global emission reductions: effectiveness of carbon emission reductions in international supply chains. Ecol Econ 158:146–157. https://doi.org/10.1016/j.ecolecon.2018.12.006
Nguyen KQ (2008) Internalizing externalities into capacity expansion planning: the case of electricity in Vietnam. Energy 33(5):740–746. https://doi.org/10.1016/j.energy.2008.01.014
Nicoletti G, Arcuri N, Nicoletti G, Bruno R (2015) A technical and environmental comparison between hydrogen and some fossil fuels. Energy Convers Manage 89:205–213. https://doi.org/10.1016/j.enconman.2014.09.057
Nouchedehi R, Amir S, Amir Masoud N, Esmaeil G (2014). Design of preliminary studies to evaluate and measure the feasibility of building a combined cycle power plant Solar and windy in Semnan province (according to the horizon of 1404). Emerging Trends in Energy Conservation, Iran
Owen AD (2004) Environmental externalities, market distortions and the economics of renewable energy technologies. The Energy Journal. https://doi.org/10.5547/ISSN0195-6574-EJ-Vol25-No3-7
Owen AD (2006) Renewable energy: externality costs as market barriers. Energy Policy 34(5):632–642. https://doi.org/10.1016/j.enpol.2005.11.017
Özer B, Görgün E, İncecik S (2013) The scenario analysis on CO2 emission mitigation potential in the Turkish electricity sector: 2006–2030. Energy 49:395–403. https://doi.org/10.1016/j.energy.2012.10.059
Papadis E, Tsatsaronis G (2020) Challenges in the decarbonization of the energy sector. Energy 205:118025. https://doi.org/10.1016/j.energy.2020.118025
Rabl A, Spadaro JV (2016) External costs of energy: how much is clean energy worth? J Solar Energy Engineering. https://doi.org/10.1115/1.4033596
Rabl A, Spadaro JV, Van Der Zwaan B (2005) Uncertainty of air pollution cost estimates: to what extent does it matter? ACS 39(2):399–408. https://doi.org/10.1021/es049189v
Rafaj P, Kypreos S (2007) Internalisation of external cost in the power generation sector: analysis with global multi-regional MARKAL model. Energy Policy 35(2):828–843. https://doi.org/10.1016/j.enpol.2006.03.003
Rentizelas A, Georgakellos D (2014) Incorporating life cycle external cost in optimization of the electricity generation mix. Energy Policy 65:134–149. https://doi.org/10.1016/j.enpol.2013.10.023
Rezafar I, Behrooz A (2014) Prediction of fossil fuel consumption in Iran power plants until 1404 with emphasis on environmental sustainability [Paper presentation]. Sustainable Ecology and Development 1th Annual Meeting., Arak, Iran
Rosen MA (2009a) Energy, environmental, health and cost benefits of cogeneration from fossil fuels and nuclear energy using the electrical utility facilities of a province. Energy Sustain Dev 13(1):43–51. https://doi.org/10.1016/j.esd.2009.01.005
Rosen MA (2009b) Energy sustainability: a pragmatic approach and illustrations. Sustainability 1(1):55–80. https://doi.org/10.3390/su1010055
Saeeidi M, Karbsi A, Sohrab T, Samadi R (2005) Environmental management of power plants. Ministry of energy, Iran
Sakulniyomporn S, Kubaha K, Chullabodhi C (2011) External costs of fossil electricity generation: Health-based assessment in Thailand. Renew Sustain Energy Rev 15(8):3470–3479. https://doi.org/10.1016/j.rser.2011.05.004
Sener C, Fthenakis V (2014) Energy policy and financing options to achieve solar energy grid penetration targets: accounting for external costs. Renew Sustain Energy Rev 32:854–868. https://doi.org/10.1016/j.rser.2014.01.030
Shahzad U (2012) The need for renewable energy sources. Energy 2:16–18
Sims RE, Rogner HH, Gregory K (2003) Carbon emission and mitigation cost comparisons between fossil fuel, nuclear and renewable energy resources for electricity generation. Energy Policy 31(13):1315–1326. https://doi.org/10.1016/S0301-4215(02)00192-1
Sovacool BK, Kim J, Yang M (2021) The hidden costs of energy and mobility: a global meta-analysis and research synthesis of electricity and transport externalities. Energy Res Social Sci 72:101885. https://doi.org/10.1016/j.erss.2020.101885
Spadaro JV, Rabl A (2008) Estimating the uncertainty of damage costs of pollution: a simple transparent method and typical results. Environ Impact Assess Rev 28(2–3):166–183. https://doi.org/10.1016/j.eiar.2007.04.001
Streimikiene D, Alisauskaite-Seskiene I (2014) External costs of electricity generation options in Lithuania. Renewable Energy 64:215–224. https://doi.org/10.1016/j.renene.2013.11.012
Streimikiene D, Roos I, Rekis J (2009) External cost of electricity generation in Baltic States. Renew Sustain Energy Rev 13(4):863–870. https://doi.org/10.1016/j.rser.2008.02.004
Sundqvist T (2004) What causes the disparity of electricity externality estimates? Energy Policy 32(15):1753–1766. https://doi.org/10.1016/S0301-4215(03)00165-4
Sundqvist T, Söderholm P (2002) Valuing the environmental impacts of electricity generation: a critical survey. J Ene Liter VIII(2):3–41
Tavanir (2017a) Detailed statistics of Iran's electricity industry, especially strategic management. IRAN Power Generation Transmission & Distribution Company. https://isn.moe.gov.ir/getattachment
Tavanir (2017b) Iran Electricity Industry Report. Minestry of Energy. https://news.moe.gov.ir/getmedia
Torki M, Abedi Z (2011) External costs analysis electricity generation from fossil power plants. Hum Environ 9(4):3–6
Towers N (2010). The Fourth Carbon Budget Reducing emissions through the 2020s-Committee on Climate Change, December 2010
UNEP (2016) Renewable energy and energy efficiency in developing countries: contributions to reducing global emissions. New Climate Institute. https://newclimate.org/wp-content/uploads/2016/11/onegigatonreport_2016.pdf
Van de Graaf T, Colgan J (2016) Global energy governance: a review and research agenda. Palgrave Commun 2(1):1–12. https://doi.org/10.1057/palcomms.2015.47
Van den Bergh JC, Botzen WJW (2015) Monetary valuation of the social cost of CO2 emissions: a critical survey. Ecol Econ 114:33–46. https://doi.org/10.1016/j.ecolecon.2015.03.015
Van Zelm R, Preiss P, Van Goethem T, Van Dingenen R, Huijbregts M (2016) Regionalized life cycle impact assessment of air pollution on the global scale: damage to human health and vegetation. Atmos Environ 134:129–137. https://doi.org/10.1016/j.atmosenv.2016.03.044
Wang C, Zhang Y, Zhang L, Pang M (2016) Alternative policies to subsidize rural household biogas digesters. Energy Policy 93:187–195. https://doi.org/10.1016/j.enpol.2016.03.007
Wang C, Zhang L, Zhou P, Chang Y, Zhou D, Pang M, Yin H (2019) Assessing the environmental externalities for biomass-and coal-fired electricity generation in China: a supply chain perspective. J Environ Manage 246:758–767. https://doi.org/10.1016/j.jenvman.2019.06.047
Zhang Y, Fu Z, Xie Y, Hu Q, Li Z, Guo H (2020) A comprehensive forecasting-optimization analysis framework for environmental-oriented power system management—a case study of Harbin City. China Sustain 12(10):4272
Ziyaei S, Panahi M, Manzour D, Karbasi A, Ghaffarzadeh H (2021a) Investigating the harmful effects of fossil fuel consumption subsides on power generation costs in Iran. Environ Energy Econ Res 5(2):1–14. https://doi.org/10.22097/EEER.2021.268905.1181
Ziyaei S, Panahi M, Manzour D, Karbasi A, Ghaffarzadeh H (2021b) Economic-Environmental Impacts of the De-Carbonisation Scenarios in Iran’s Power Generation Sector, [Doctoral disseration thesis, Environmental Economics, Science and Research Branch, Islamic Azad University of Iran]. SRBIAU University library
Ziyaei S, Panahi M, Manzour D, Karbasi A, Ghaffarzadeh H (2023) Sustainable power generation through decarbonization in the power generation industry. Environ Monit Assess 195(1):1–24. https://doi.org/10.1007/s10661-022-10794-2
Funding
No funding was received for conducting this study.
Author information
Authors and Affiliations
Contributions
The manuscript has five contributions including, SZ: Conceptualization, Data curation, Investigation, Methodology, Software, Formal analysis, Writing—original draft, Visualization. MP: Supervision, Investigation, Formal analysis, Writing—review and editing, Validation. DM: Formal analysis, Writing—review and editing, Validation. AK: Writing—review and editing. HG: Writing—review and editing.
Corresponding author
Ethics declarations
Conflict of interest
All authors certify that they have no affiliations with or involvement in any organization or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript.
Ethical Approval
Not applicable.
Consent to Participate
Not applicable.
Consent to Publish
Not applicable.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Ziyaei, S., Panahi, M., Manzour, D. et al. Impact Analysis of Internalizing Environmental Costs on Technical, Economic, and Environmental Performances for Power Plants. Int J Environ Res 17, 54 (2023). https://doi.org/10.1007/s41742-023-00543-9
Received:
Revised:
Accepted:
Published:
DOI: https://doi.org/10.1007/s41742-023-00543-9