The external costs of electricity generation

From LightBucket:

ExternE’s definition of external costs:

An external cost, also known as an externality, arises 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.

External Costs, ExternE, 2003 [1]

The ExternE project considered seven types of damage in its valuation of external costs:

  • Impact on human health – mortality;
  • Impact on human health – morbidity;
  • Impact on building material;
  • Impact on crops;
  • Impact on global warming;
  • Amenity losses;
  • Impact on ecosystems;

The impacts range from human mortality effects – cancers, accidents, reduced life expectancy – to amenity losses from noise exposure.

The external costs were calculated using an “impact pathway assessment”:

Impact pathway assessment is a bottom-up-approach in which environmental benefits and costs are estimated by following the pathway from source emissions via quality changes of air, soil and water to physical impacts, before being expressed in monetary benefits and costs.

External Costs, ExternE, 2003 [1]

ExternE certainly doesn’t claim to be the last word on external costs of energy, but it is among the most detailed and comprehensive analyses to date.

The results for electricity generation are summarised in the ExternE brochure “External Costs” [1], and more detail is available in the “National Implementation” document [2].

Fifteen countries and nine electricity generating technologies were studied. Table 1 has the summarised results for the external costs by country and by electricity technology. The external costs are expressed in euro cents per kilowatt-hour of electricity generated.

Table 1.  External costs of electricity generation
Country Coal &


Peat Oil Gas Nuclear Biomass Hydro PV Wind
€ cent per kWhe (a)
Austria 1–3 2–3 0.1
Belgium 4–15 1–2 0.5
Denmark 4–7 2–3 1 0.1
Finland 2–4 2–5 1
France 7–10 8–11 2–4 0.3 1 1
Germany 3–6 5–8 1–2 0.2 3 0.6 0.05
Greece 5–8 3–5 1 0–0.8 1 0.25
Ireland 6–8 3–4
Italy 3–6 2–3 0.3
Netherlands 3–4 1–2 0.7 0.5
Norway 1–2 0.2 0.2 0–0.25
Portugal 4–7 1–2 1–2 0.03
Spain 5–8 1–2 3–5 (b) 0.2
Sweden 2–4 0.3 0–0.7
U.K. 4–7 3–5 1–2 0.25 1 0.15
Data are from ref. [1].

The countries listed are the EU15 except Luxembourg, with Norway also included.

Units of external costs are € cents per kilowatt-hour of electricity.

External costs that exceed the UK domestic electricity price in 2003 are highlighted .


(a)  Sub-total of quantifiable externalities (such as global warming, public health, occupational health, material damage).

(b)  Biomass co-fired with lignites.

What do the numbers show? There’s a significant spread in the country-to-country figures, but overall coal and oil have the highest external costs, and wind has the lowest external costs. Nuclear and solar PV have roughly similar external costs, with nuclear slightly lower, and both are lower than biomass and gas. The hydro figures have a thirty-fold spread between the highest and lowest values, reflecting the very site-specific nature of the impacts from hydropower.


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