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Internalization of External Costs of Energy Generation in Central and Eastern European Countries

Author

Listed:
  • Vojtěch, Máca
  • Jan, Melichar
  • Milan, Ščasný

Abstract

In this article a bottom-up approach to quantification of air pollution externalities from electricity generation is used to show that market-based instruments are not very effective in internalizing these external costs in six CEE countries. Although governments in CEE countries have regulated air emissions by imposing strict command-and-control measures, most of them have also introduced air emission charges and more recently taxes on electricity. We find however that the level of internalization by these two economic instruments is fairly low for existing fossil fired power plants ranging from 3% for coal- and lignite-fuelled plants to 31% for gas-fuelled plants. The picture improves if cross-subsidies for renewable electricity are accounted for but the internalization level is still below air pollution–related external costs, between 9% and 55% for coal- and oil-fired power plants. A substantial over-internalization by these three instruments is however encountered in the case of gas-fired power plants.

Suggested Citation

  • Vojtěch, Máca & Jan, Melichar & Milan, Ščasný, 2012. "Internalization of External Costs of Energy Generation in Central and Eastern European Countries," MPRA Paper 57988, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:57988
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    File URL: https://mpra.ub.uni-muenchen.de/57988/1/MPRA_paper_57988.pdf
    File Function: original version
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    References listed on IDEAS

    as
    1. Diakoulaki, D. & Mirasgedis, S. & Tourkolias, C., 2007. "Assessment and exploitation of energy-related externalities in the industrial sector," Energy Policy, Elsevier, vol. 35(5), pages 2925-2938, May.
    2. Nicholas Z. Muller & Robert Mendelsohn & William Nordhaus, 2011. "Environmental Accounting for Pollution in the United States Economy," American Economic Review, American Economic Association, vol. 101(5), pages 1649-1675, August.
    3. Lawrence H. Goulder & Ian W. H. Parry, 2008. "Instrument Choice in Environmental Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 152-174, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Karel Janda & Jan Malek & Lukas Recka, 2017. "Influence of Renewable Energy Sources on Electricity Transmission Networks in Central Europe," Working Papers IES 2017/05, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2017.
    2. repec:eee:jfpoli:v:79:y:2018:i:c:p:235-246 is not listed on IDEAS
    3. repec:eee:enepol:v:108:y:2017:i:c:p:524-537 is not listed on IDEAS
    4. Rečka, L. & Ščasný, M., 2016. "Impacts of carbon pricing, brown coal availability and gas cost on Czech energy system up to 2050," Energy, Elsevier, vol. 108(C), pages 19-33.
    5. repec:prg:jnlpol:v:2017:y:2017:i:6:id:1172:p:728-750 is not listed on IDEAS
    6. Janda, Karel & Málek, Jan & Rečka, Lukáš, 2017. "Influence of renewable energy sources on transmission networks in Central Europe," Energy Policy, Elsevier, vol. 108(C), pages 524-537.

    More about this item

    Keywords

    air pollution; Central and Eastern Europe; economic instruments; external costs; internalization;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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