New Commission report counts the social cost of transport and electricity generation

September 10, 2003

Brussels, 09 Sep 2003

The European Commission has carried out new research aimed at quantifying the full socio-environmental cost of different methods of transport and electricity generation, the results of which could be used impose eco-taxes on the most damaging technologies.

Socio-environmental, or 'external', costs from activities such as electricity generation are said to arise when: 'the social or economic activities of one group of persons have an impact on another group and when that impact is not fully accounted, or compensated for, by the first group.'

In the foreword to a report containing the findings of the ExternE study, Research Commissioner Philippe Busquin says that the study allows different fuels and technologies for the electricity and transport sectors to be compared: 'Policy actions could therefore be taken to tax the most damaging fuels and technologies or to encourage those with lower socio-environmental costs.'

The types of impacts analysed in the report include human health, damage to buildings, crops and ecosystems, global warming and noise pollution. The research employs a bottom-up methodology by measuring source emissions, analysing changes in air, soil and water quality, before assessing physical impacts and expressing them in monetary terms. This is designed to take into account the highly site dependent nature of external costs.

When addressing the external cost of electricity generation, the report warns that variations due to location make it very difficult to simply compare the results of different technologies. However, the results show that generally, wind technologies are very environmentally friendly with regard to emissions of 'classical' pollutants such as sulphur dioxide, as well as greenhouse gases.

Coal technologies, meanwhile, are said to 'carry the burden of their very high CO2 [carbon dioxide] emissions' with regard to greenhouse gas impacts. Furthermore, old coal-fired power plants are also high emitters of classical pollutants, and as such are described as the worst available technology overall.

In monetary terms, the total cost of damage caused by coal fired electricity generation is equal to an extra 0.75 euro per kilowatt-hour, while the external cost of wind generated electricity is only 0.05 euro per kilowatt-hour. Whilst these figures could not be applied generically to all production sites, they can act as a useful tool to policy makers when drafting environmental legislation.

The external costs associated with different types of transport are presented in much the same way. The report concludes that as electric trains have no direct emissions, the main external cost associated with this form of transport is electricity generation, making it by far the most environmentally friendly option. The second best vehicle category is the coach as, thanks to its high capacity use, its final cost expressed in euro per 100 passenger-kilometres is relatively low.

The external costs for all types of transport take into account not only tailpipe emissions and pollution caused during fuel production, but also the environmental impacts of vehicle production and infrastructure building. The worst performer in most instances was the diesel powered car.

In Germany, the results show that for 1998, the total external costs associated with the transport sector as a whole amounted to 33 billion euro. This represents 1.7 per cent of German GDP for that year, and takes into account accidents, noise, CO2 emissions and air pollution. Road transport alone accounted for over 30 billion euro of external costs.

The study's authors stress that there are major uncertainties contained within the results, and that current research into the health impacts of pollution and the value of a life year lost, for example, will have a significant impact on future findings.

However, the results of the ExternE study will be communicated to European stakeholders, which the authors believe will make the decision making process more transparent and will result in areas for priority research being identified.

'The knowledge of a possible range of the external costs is obviously a better aid for policy decisions than the alternative - having no quantitative information at all,' the report concludes.

To read the ExternE report (in English), please consult the following web address: y/pdf/externe_en.pdf

CORDIS RTD-NEWS / © European Communities

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