Environmental Engineering Reference
In-Depth Information
development policy. In this section, each economic factor will be introduced
and critically examined from an applied policy perspective.
10.4.1 Economic Factor 1: Internalization of Externalities
he term “externalities” refers to costs or beneits associated with the use of
a particular energy technology that are not incorporated into the end-cost
of electricity generated by the technology in question. Every technology
produces hidden costs and beneits that somehow must be factored into the
end-price if one is to equitably compare the true cost of each technology.
For example, in some communities wind turbines are perceived to deile the
community's aesthetics, and as such pose a cost in terms of hindering per-
sonal enjoyment of a community's vistas. On the other hand, wind power
systems mitigate greenhouse gas emissions when compared to most other
conventional technologies, and as such sire a beneit that should be fac-
tored into cost comparisons between wind power and other technologies.
As another example, coal-ired power plants emit a number of atmospheric
pollutants which adversely impact individuals and communities, yet these
costs are rarely incorporated into the overall price of coal-ired electricity.
hese two examples highlight an important insight regarding externalities
and electricity technologies—typically wind power provides as many exter-
nal beneits as external costs, whereas for most of the conventional energy
technologies, external costs outweigh external beneits. he implication is
that when externalities are internalized into the various energy technolo-
gies, the economic viability of wind power is enhanced.
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he obvious lesson to draw from these indings is that an efort should
be made to internalize all externalities associated with each technological
platform in order to ensure economic comparisons are comprehensive and
equitable. he problem is that many externalities are hard, if not impossible,
to quantify in a noncontentious manner. For example, particulate matter
(PM) emitted from coal-ired power plants in China is considered to be the
chief culprit behind 1.2 million premature deaths caused by air pollution
in China in 2010.
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How does one put a price on 1.2 million human lives in
order to calculate the unaccounted for mortality costs caused by coal-ired
power in this regard? As another example, CO
2
emitted from fossil fuel-ired
power plants is contributing to the accumulation of greenhouse gases in the
atmosphere. However, in order to estimate the contribution that one tonne
of CO
2
is making to climate change, one must irst estimate the total cost of
climate change, which is currently a contentious exercise.
