Externalities and coal-fired power generation, IEAPER/29

Author(s): Lee B Clarke

Ref: IEAPER/29
ISBN: 92-9029-277-6
Published Date: 01/09/1996
No. of Tables: 6
No. of Figures: 6
No. of Pages: 29

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This Perspectives report by Lee Clarke examines the concept of externalities and environmental cost assessment as applied to coal-fired power generation. The rationale for considering externalities, activities likely to cause externalities, and methodologies for valuing environmental effects are reviewed. Implications for coal and coal-use are discussed. The use of externalities in decision making is related and complementary to environmental impact assessment and other policy tools such as cost-benefit analysis, life cycle analysis, and risk assessment. The utility of externality assessment is highly dependent on the quality of the data used to arrive at valuations and the assumptions made. To gain acceptance, externalities analysis must be performed in a way that is consistent, comprehensive, and transparent. A partial approach may unfairly disadvantage coal and fail to achieve the goal of optimal resource allocation. Despite the difficulties outlined, the analysis of externalities and the valuation of external costs can provide decision-makers with a useful additional tool for making policy determinations providing the limitations are recognised.

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