The Externalities of Energy Production Systems
The economics term externality is a cost or benefit accrued by a third party from the actions of others where the third party did not choose to acquire said costs or benefits. The term has been widely adopted by the environmental lobby to describe negative impacts of energy production systems. What is all too often overlooked are the externalised benefits the same energy production systems provide. This post aims to summarise both internal and external costs and benefits of 12 electricity production systems employing 12 different measures.
[Inset image: The proposed Swansea Bay tidal lagoon power station. The proponents of the scheme were keen to emphasise the external recreational benefits offered by an afternoon stroll around the 9.5 km wall of the lagoon and sailing and boarding in the sheltered waters. But what about the environmental costs to migrating sea trout? And to changing the hydrology of the coastal ecosystem? How do you begin to compare the costs and benefits of a scheme like Swansea Bay Tidal Lagoon with a nuclear power station?]
In the environmental impact of energy systems, the term externality is used to describe harm done by the combustion of fossil fuels, particularly greenhouse gas emissions. The argument goes that the fossil fuel producers and consumers do not currently pay for this harm and should do so. The inevitable consequence of adopting these measures will be higher energy prices that spread energy poverty and hold back economic growth. It is therefore very difficult to understand why many OECD governments are preparing to introduce measures like a carbon tax that will simply impoverish their citizens and national economies.
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