Externalities of biomass based electricity production compared to power generation from coal in the Netherlands

Abstract

Externalities of electricity production from biomass and coal are investigated and compared for the Dutch context. Effects on economic activity and employment are investigated with help of Input/Output and multiplier tables. Valuations of damage from emissions to air are based on generic data from other studies. In addition external costs are estimated for nitrogen leaching and for the use of agrochemicals for energy crop production. The average private costs for biomass and coal based power generation are projected to be 68 and 38 mECU/kWh respectively in the year 2005. It is assumed that biomass production takes place on fallow land. Coal mining is excluded from the analysis. If the quantified external damages and benefits are included the cost range for bio-electricity is 53-70 mECU/kWh and 45-72 mECU/kWh for coal. Indirect economic effects (increment of Gross Domestic Product) and the difference in CO2 emissions are the most important distinguishing factors between coal and biomass in economic terms. Damage costs of other emissions to air (NOx , SO2 , dust and CO) are of the same order of magnitude for both coal and biomass (coal mining excluded). In this analysis environmental impacts of energy farming are compared mainly to fallow land focused on the use of fertilizers and agrochemicals. The related damage costs appear to be low but should be considered as a preliminary estimate only. The quantitative outcomes should not be considered as the external costs of the two fuel cycles studied. Many impacts have not been valued and large uncertainties persist e.g. with respect to the costs of climate change and numerous dose response relations. More detailed analysis is desired with respect to macro-economic impacts. The results serve as a first indication, but the outcomes plead for the support of bio-electricity production and/or taxation of coal based power generation.