Electricity production leads to a considerable number of negative environmental effects. By expressing the various effects in monetary terms (euro), the total environmental impact or damage cost can be visualised. The damage cost is a good point for comparison for cost-benefit analyses and impact limiting measures. Damage costs can also be used as a measure for (financial) stimuli: with an efficient policy, a tax matches the marginal damage cost, or a subsidy matches the avoided marginal damage cost.

Commissioned by MIRA (Flemish Environment Agency), VITO quantified the total damage cost of electricity production in Flanders for the years 2000-2008. In this, the following items were considered:
1. the complete lifecycle of a technology: the construction phase, the fuel supply, the actual operation and the final dismantling;
2. the health effects of various emissions, contribution to climate change, impact on agriculture and on materials and buildings, impact of acidifying and eutrophying emissions on the biodiversity, radiation risks at all stages of the nuclear fuel cycle, risk of accidents, loss of biodiversity as a result of land use, noise and visual impact.

The damage costs under the 3 scenarios* in the Environment Outlook 2030 were also calculated. In addition, the research report also includes an estimate of the extent to which these damage costs are offset in the price of electricity paid by consumers. The data reflect the latest state of knowledge concerning environmental pressure, impacts and how to put a value on them. The study includes extremely diverse impacts and risks, and for some the cost estimate is still quite immature (e.g. biodiversity) or is of a very complex and occasionally controversial nature (nuclear risks, climate change). That does not detract from the fact that interesting lessons can be learned from this.

Some conclusions from the report:

• The damage costs of renewable technologies (mainly wind, water and solar energy) are much lower than the damage costs of conventional non-renewable technologies (mainly coal and gas-fired power stations). For nuclear electricity production the known part of the damage costs is also low (first figure).
• CO₂ capture and underground storage (so-called CCS technology) can limit the damage cost of fossil fuel power stations. Even then, their damage cost still remains many times the damage cost of wind and solar energy and nuclear power stations (first figure).
• In the period 2020-2030 the damage costs per unit of electricity produced by fossil fuel power stations is on the same magnitude as the production costs. The total social cost (= total production costs and damage costs) of electricity produced in that type of power station is thus roughly twice as high as the ‘known’ production cost. For nuclear power stations, fossil power stations with CCS and for renewable technologies the damage costs are noticeably less than the production costs.
• Despite a slight increase (+2%) in the electricity production in Flanders, the associated damage cost dropped from 779 million euro in 2000 to 457 million euro in 2008 (-41%). In particular, the damage costs originating from old coal power stations dropped from 556 to 186 million euro due to the decreased use of coal power stations and the installation of end-of-pipe purification techniques.
• In the next 2 decades the damage cost of electricity production in Flanders increases in the 3 scenarios in the Environment Outlook 2030 (second figure, compared with 2010). This is partly due to an increasing electricity demand/production (+ 30% to 40% between 2008 and 2030) and the phasing out of nuclear power stations. This also comes from the fact that the damage cost from the same emissions increases with time for various reasons: in particular, a combination of the increasing damage cost per ton CO₂ to keep global warming below 2°C, of the higher damage cost per ton pollutant due to increasing background concentrations in the air, of increasing prosperity and of the population growth increase the damage costs further.
• The differences in impact of various types of electricity production are not sufficiently offset in the electricity prices paid by consumers.
• In future electricity supplies, the most important component of the damage costs are the CO₂ emissions. If new policy measures offset a larger part of the damage costs in the price of electricity, there will eventually be shifts towards the technologies with lower social costs (= production costs + damage costs).

* The reference scenario assumes that the existing policy as of 1 April 2008 will continue unchanged. The Europe scenario and the visionary scenario assume that additional measures will be taken in order to achieve the European environmental objectives for 2020-2030, and respectively drastically slow the climate change with a view to a sustainable future.

Read the English summary of the new MIRA research report ‘Damage costs of current and future electricity production in Flanders – Damage costs and estimate of the share of external costs’.

Read more about the valuation of the environmental effects of electricity production in Flanders in the Dutch version of the research report ‘Damage costs of current and future electricity production in Flanders – Damage costs and estimate of the share of external costs’.

o Contact person: Johan Brouwers (j.brouwers@vmm.be)

The damage costs of air pollution and climate change that were calculated in this study are based on the results of the study: Updating the external cost of environmental damage (general for Flanders) in relation to air pollution and climate change (in Dutch).

Read the English summary of this report.

o Contact person: Line Vancraeynest (l.vancraeynest@vmm.be)

Figure 1: Electricity production damage cost of each type of installation for the complete lifecycle (construction + fuel supply + operation + dismantling) and divided into the different effects, estimated for Flanders in 2020



Link to the supporting data for figure 1 (Excel, 39 KB)

Figure 2: Electricity production damage cost in Flanders in the period 2000-2008 and in 3 scenarios (2010-2030)



Link to the supporting data for figure 2 (Excel, 25 KB)