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Impact of a possible environmental externalities internalisation on energy prices: The case of the greenhouse gases from the Greek electricity sector

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  • Georgakellos, Dimitrios A.
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    The present paper is concerned with the impact of the internalisation of environmental externalities on energy prices. In this context, its aim is to quantify the external cost of greenhouse gases (specifically carbon dioxide) generated during electricity production in the thermal power plants in Greece and to estimate the impact on the electricity production cost and on the electricity prices of a possible internalisation of this external cost by the producers. For this purpose, this paper applies the EcoSenseLE online tool to quantify the examined externalities. This research finds that the calculated external cost is significantly high (compared to the corresponding production cost) mainly in lignite-fired power plants. Specifically, a possible internalisation of this external cost would increase the production cost by more than 52% (on average), which, in turn, would affect similarly the electricity prices. This finding could be important for decision makers in the electricity sector to develop strategies for emission reduction and to develop environmental and energy policies. The general limitation of the external cost methodology applies to this work as it uses the standard method developed for the Externe project. Similarly, the data limitations as well as assumptions related to the costs and exclusions/ omissions of cost elements affect the results.

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    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 32 (2010)
    Issue (Month): 1 (January)
    Pages: 202-209

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    Handle: RePEc:eee:eneeco:v:32:y:2010:i:1:p:202-209
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    1. Bozicevic Vrhovcak, Maja & Tomsic, Zeljko & Debrecin, Nenad, 2005. "External costs of electricity production: case study Croatia," Energy Policy, Elsevier, vol. 33(11), pages 1385-1395, July.
    2. Tsumura, Toshikazu & Okazaki, Hirofumi & Dernjatin, Pauli & Savolainen, Kati, 2003. "Reducing the minimum load and NOx emissions for lignite-fired boiler by applying a stable-flame concept," Applied Energy, Elsevier, vol. 74(3-4), pages 415-424, March.
    3. Haralambopoulos, D. & Spilanis, I., 1997. "Identification and assessment of environmental benefits from solar hot water production," Renewable Energy, Elsevier, vol. 11(2), pages 177-189.
    4. Kato, Seizo & Widiyanto, Anugerah, 2005. "Environmental impact consolidated evaluation of energy systems by an LCA-NETS scheme," Energy, Elsevier, vol. 30(11), pages 2057-2072.
    5. Newell, Richard G. & Jaffe, Adam B. & Stavins, Robert N., 2006. "The effects of economic and policy incentives on carbon mitigation technologies," Energy Economics, Elsevier, vol. 28(5-6), pages 563-578, November.
    6. Kemal Ozturk, Harun & Yilanci, Ahmet & Atalay, Oner, 2007. "Past, present and future status of electricity in Turkey and the share of energy sources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(2), pages 183-209, February.
    7. Rezek, Jon P. & Campbell, Randall C., 2007. "Cost estimates for multiple pollutants: A maximum entropy approach," Energy Economics, Elsevier, vol. 29(3), pages 503-519, May.
    8. Laurikka, Harri & Koljonen, Tiina, 2006. "Emissions trading and investment decisions in the power sector--a case study in Finland," Energy Policy, Elsevier, vol. 34(9), pages 1063-1074, June.
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