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How do The External Costs of Renewable and Fossil Fuel Energy Compare?

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Part of the book series: Springer Proceedings in Energy ((SPE))

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Abstract

This chapter presents the methodology and results of the Externalities of Energy project as an example of how the environmental impacts of energy generation can be identified. ExternE was a large international research study sponsored by the European Commission. The ExternE methodology was developed to provide a consistent and transparent framework for transforming all the non-negligible external impacts of energy production into monetary values.

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Notes

  1. 1.

    It should be noted that this does not necessarily imply that wind turbines represent a visual disamenity in all cases; this is dependent on the affected population and their preferences. In order to assess the effect in Turkey a study assessing this would likely be necessary. It is also true that preferences are dynamic, and can change over time.

  2. 2.

    The use of the phrase “statistical life” is intended to emphasise that VOSL is measuring a statistical change in the risk to a life, and not the value of the life of a known individual. While any given individual may value their or another’s life infinitely high, the implicit valuation through their behaviour shows that individuals accept more than zero risk to their life.

  3. 3.

    Relevant studies also highlight methodological issues in valuation such as challenges in conveying small changes in risks to respondents such that they fully comprehend them [4]. There are also key issues in comparing results from WTP and WTA estimates for risk reductions [5].

  4. 4.

    Discounting is the process by which costs or benefits that occur in the future are given less weight than those that occur in the present. This is for a number of reasons, including impatience (or “pure time preference” that individuals prefer benefits now and costs to be deferred), uncertainty regarding the future state of the world, and the opportunity cost of investment (i.e. £1 saved today will return £1 + i in a year’s time where i is the interest rate). The process of discounting generates the present value of a given sum of money:

    $$ \mathrm{PV}=\frac{x}{{\left(1+ r\right)}^2} $$

    Where PV is the present value of the sum of money x, r the discount rate and t the number of years into the future this sum of money is being considered.

References

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  2. ExternE (2005) Externalities of energy: methodology 2005 update. European Commission, Directorate General for Research, Brussels

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  8. Johannesson M, Johansson P (1997) To be, or not to be, that is the question: an empirical study of the WTP for an increased life expectancy at an advanced age. J Risk Uncertainty 13(2):163–174

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  11. DECC 2009, UK Renewable Energy Strategy, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/228866/7686.pdf

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Author information

Authors and Affiliations

  1. EFTEC (Economics for the Environment Consultancy), 73-75 Mortimer Street, London, W1W 7SQ, UK

    Rohit Mistry

  2. London, UK

    Lawrie Harper Simmonds

Authors
  1. Rohit Mistry
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  2. Lawrie Harper Simmonds
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Corresponding author

Correspondence to Rohit Mistry .

Editor information

Editors and Affiliations

  1. Department of Mechanical Engineering, Marmara University, Istanbul, Turkey

    Tanay Sidki Uyar

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Mistry, R., Simmonds, L.H. (2017). How do The External Costs of Renewable and Fossil Fuel Energy Compare?. In: Uyar, T. (eds) Towards 100% Renewable Energy. Springer Proceedings in Energy. Springer, Cham. https://doi.org/10.1007/978-3-319-45659-1_35

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  • DOI: https://doi.org/10.1007/978-3-319-45659-1_35

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-45658-4

  • Online ISBN: 978-3-319-45659-1

  • eBook Packages: EnergyEnergy (R0)

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