KAZALCI OKOLJA

Key message
Neutral

In Slovenia, external costs of electricity production, which are generated as a consequence of the impact of electricity production on the environment, are between 1.5 and 4  €c2000/kWh. Despite increasing environmental awareness, the price of electricity still does not reflect all external costs. Due to incorrect price signals, received by consumers and electricity producers, energy resources in Slovenia remain used in a non-optimal way.


The indicator External costs of electricity production is used for the assessment of costs; with regard to the level of environmental and energy taxes, it is assessed to what amount the final prices of energy reflect the environmental costs. External costs are generated in production processes as negative effects influencing economic, social and environmental systems. In practice, there are several methods and methodologies of calculating external costs of electricity production. They differ in their manner of assessment, definition and selection of environmental and other influences, assessments of specific cost impact, etc. In literature, external costs are also referred to as externalities or social marginal costs.


Charts

Figure EN23-1: External costs of electricity production in Slovenia, 1990-2015 (fixed prices 2000)
Show data
CO2 equivalent - lower estimate SO2 - lower estimate Nox - lower estimate NMVOC - lower estimate NH3 - lower estimate PM10 - lower estimate nuclear energy - lower estimate Total - lower estimate Electricity production - lower estimate Specific external costs - lower estimate CO2 ekv - higher estimate SO2 - higher estimate Nox - higher estimate NMVOC - higher estimate NH3 - higher estimate PM10 - higher estimate nuclear energy - higher estimate Total - higher estimate Electricity production - higher estimate Specific external costs - higher estimate
1990 115.82 828.11 108.97 0.13 0 0 244.43 1297.46 12442 10.43 487.65 2366.04 316.37 0.40 0 0 244.43 3414.89 12442 27.45
1991 100.87 738.93 89.27 0.11 0 0 37.20 966.38 12742 7.58 424.70 2111.22 259.16 0.36 0 0 37.20 2832.66 12742 22.23
1992 110.26 809.13 90.04 0.12 0 0 256.58 1266.12 12086 10.48 464.24 2311.79 261.41 0.38 0 0 256.58 3294.39 12086 27.26
1993 106.58 791.46 94.14 0.12 0 0 199.98 1192.28 11692 10.20 448.77 2261.30 273.32 0.36 0 0 199.98 3183.74 11692 27.23
1994 103.02 765.81 93.57 0.11 0 0 100.77 1063.29 12631 8.42 433.78 2188.02 271.65 0.36 0 0 100.77 2994.58 12631 23.71
1995 106.69 544.66 84.12 0.12 0 0 167.53 903.11 12654 7.14 449.22 1556.16 244.21 0.37 0 0 167.53 2417.50 12654 19.10
1996 99.43 532.75 84.51 0.11 0 0 240.11 956.91 12735 7.51 418.64 1522.15 245.34 0.35 0 0 240.11 2426.58 12735 19.05
1997 107.99 568.27 96.07 0.12 0 0 118.07 890.52 13176 6.76 454.70 1623.64 278.92 0.37 0 0 118.07 2475.69 13176 18.79
1998 112.55 537.86 98.67 0.13 0 0 148.92 898.12 13705 6.55 473.90 1536.74 286.45 0.39 0 0 148.92 2446.41 13705 17.85
1999 100.36 463.13 79.96 0.11 0 0 192.37 835.93 13262 6.30 422.55 1323.23 232.14 0.35 0 0 192.37 2170.64 13262 16.37
2000 105.90 451.77 87.22 0.12 0 14.54 310.23 969.78 13624 7.12 445.89 1290.76 253.23 0.36 0 42.31 310.23 2342.79 13624 17.20
2001 120.01 284.17 91.56 0.13 0 14.20 134.98 645.04 14466 4.46 505.31 811.92 265.81 0.40 0 41.30 134.98 1759.72 14466 12.16
2002 124.89 293.02 101.96 0.13 0 16.68 69.42 606.10 14600 4.15 525.87 837.20 296.01 0.42 0 48.52 69.42 1777.43 14600 12.17
2003 120.00 279.73 91.34 0.13 0 14.29 113.76 619.24 13821 4.48 505.28 799.22 265.17 0.42 0 41.56 113.76 1725.40 13821 12.48
2004 122.77 229.44 79.05 0.13 0 13.93 101.85 547.18 15273 3.58 516.94 655.55 229.49 0.42 0 40.53 101.85 1544.78 15273 10.11
2005 123.49 178.63 78.20 0.14 0 13.77 113.90 508.14 15117 3.36 519.98 510.38 227.04 0.44 0 40.06 113.90 1411.80 15117 9.34
2006 124.70 53.20 79.45 0.14 0 7.22 137.08 401.80 15114 2.66 525.04 152.01 230.66 0.45 0 21.01 137.08 1066.26 15114 7.05
2007 129.16 49.48 72.36 0.15 0 8.19 107.27 366.61 15043 2.44 543.82 141.38 210.07 0.46 0 23.83 107.27 1026.83 15043 6.83
2008 124.37 45.34 72.10 0.16 0 14.91 17.75 274.63 16398 1.67 523.65 129.55 209.32 0.52 0 43.36 17.75 924.14 16398 5.64
2009 119.03 40.35 64.91 0.21 0 9.88 79.53 313.90 16401 1.91 501.16 115.28 188.43 0.67 0 28.75 79.53 913.82 16401 5.57
2010 121.34 34.62 67.29 0.24 0 8.57 104.54 336.60 16433 2.05 510.89 98.92 195.35 0.75 0 24.93 104.54 935.39 16433 5.69
2011 122.11 41.68 65.66 0.25 0 10.84 8.37 248.90 16056 1.55 514.14 119.08 190.62 0.77 0 31.54 8.37 864.52 16056 5.38
2012 116.43 38.51 61.86 0.23 0 11.13 109.05 337.20 15729 2.14 490.25 110.02 179.58 0.71 0 32.36 109.05 921.97 15729 5.86
2013 110.54 41.31 56.10 0.21 0 9.42 166.93 384.51 16103.09 2.39 465.45 118.02 162.87 0.66 0 27.41 166.93 941.33 16103.09 5.85
2014 84.91 27.05 41.60 0.18 0 7.69 13.12 174.55 17436.92 1.00 357.54 77.28 120.77 0.56 0 22.37 13.12 591.64 17436.92 3.39
2015 87.15 11.04 27.88 0.18 0 7.99 97.83 232.08 15100.38 1.54 366.95 31.55 80.93 0.58 0 23.25 97.83 601.09 15100.38 3.98

Goals

- liberalisation of internal markets with electricity and natural gas;
- achievement of efficiency by increasing competitiveness, especially the efficiency of investments and operations and unburdening of the sector of external costs;
- internalisation of external energy costs by increasing taxation on fossil fuels for heating and extension of taxation for energy products that are not subject to tax;
- increase of the competitiveness of renewable energy sources and measures of energy efficiency, environmental measures, decrease of GHG emissions, decrease of dependence on imports of oil derivatives as well as establishment of the principle »the pollutant pays«;
- preparation and introduction of the methodology for internalisation of external costs through taxation; in accordance with the principle »the pollutant pays«, gradual increase of the tax burden for mineral oils and heating gases in wider consumption and introduction of electricity excise duty for final consumers.


Electricity production has a huge impact on the environment and human health; however, the impact is different with regard to the method and location of electricity production. Prices of electricity production mainly do not include the damage caused by electricity production; therefore, external costs of electricity are generated.

The calculations of external costs of electricity production clearly indicate that external costs of electricity production in the period 1990–2007 decreased significantly, despite the increase in electricity production. It is estimated that in Slovenia in 2007 external costs of electricity production amounted from 2.6 to 7.1 €cent/kWh, which is more than what these costs represented on average in the EU-25 in 2004 (1.8 – 6.0 €cent/kWh). External costs in Slovenia are higher due to a high share of electricity production from coal.

The level of external costs of electricity production in Slovenia is largely determined by SO2, NOx and VOC emissions that influence human health and ecosystems, which indirectly also have an influence on higher expenses in health care and agriculture that are supported by the entire society. The damage caused by GHG emissions also plays a significant role in Slovenia. However, caution is necessary in the assessment of the impact of GHG emissions, since due to the uncertainty of climate change, the probability of their impact as well as the assessment of such an impact from an ethical and economic point of view is highly questionable in this assessment.

Total external costs of electricity production in Slovenia are dependent upon several factors: the structure of sources of electricity production, efficiency of electricity production and location of production units. In Slovenia, one third of electricity is produced from coal, while the efficiency of electricity production in thermal power plants is lower in comparison with such units in the EU; furthermore, the production units are located in the direct vicinity of urban settlements.

According to individual energy resources, electricity production from coal and liquid fuels has the highest external costs. It is estimated that in 2007 the external costs of electricity production from coal amounted from 4.6 to 16.2 €cent/kWh, and the external costs of electricity production from liquid fuels (heating oil, residual fuel oil, liquefied petroleum gas) from 3.9 to 13.4 €cent/kWh. In electricity production from natural gas, the external costs were estimated to be from 2.9 to 10.4 €cent/kWh, for nuclear energy 2.2 €cent/kWh, and for renewable energy sources up to 0.1 €cent/kWh. With regard to 1990, the external costs of electricity production decreased in all technologies. The biggest progress was made in the area of coal, primarily due to the desulphurizing of flue gases in Šoštanj thermal power plant and Trbovlje thermal power plant; the exchange between fuels did not have a significant impact on the reduction of external costs.

In Slovenia, the internalisation of external costs is not implemented completely due to numerous opposite interests, uncertainties and implementing problems. In Slovenia, the funds collected by excise duties or environmental taxes are still not intended for the prevention or recovery of external impacts. However, the opposite incentive price policy is being implemented, with smaller fiscal internalisation (taxation) or even with subsidies of some forms of energy (see EN22 Subsidies in the energy sector).

The internalisation of external costs is considered as a market mechanism, which can limit the environmental and spatial impact. For internalisation, it is necessary to financially evaluate the external influences and include them in the accounts in an appropriate manner. The principles 'the pollutant pays' and 'internalisation of external costs' are not always feasible, especially when in cases of contradiction between the economy and environmental impact the strategic reliability of supply and social-political aspects are in question (for instance, the abandonment of domestic coal in Trbovlje-Hrastnik mine, priority dispatching, etc.). Therefore, in these cases the second best approach within the meaning of economy theory was selected in Slovenia – financial incentives for renewable energy sources and technologies that reduce negative environmental impacts.

Until recently, electricity was not a subject for special taxation; the only tax burden for households was the value-added tax. In 2007, the excise duty on electricity was introduced in the amount of 1 €/MWh for households and 0.5 €/MWh for commercial use. On the basis of data on electricity prices for households, the tax burden from the value-added tax in 2007 amounted to 1.4 €cent/kWh, and including the excise duty to 1.5 €cent/kWh. With such a level of taxes, only partial internalisation of external costs of electricity was provided, which amounted from 2.6 to 7.1 €cent/kWh in 2007. The introduction of an excise duty on electricity contributed the first step to better internalisation; however, the level of excise duty remains too small so that the prices of electricity would better reflect the external costs of electricity production.


Methodology

Data for Slovenia and other countries

Objectives summarised by: Resolucija o Nacionalnem energetskem programu (ReNEP) (Resolution on the National Energy Programme, Official Gazette of the RS, No. 57/04).
Source database or source: The data on emissions generated in electricity and heat production are collected by the Environmental Agency of the Republic of Slovenia. The cost factors or specific external costs caused by pollution sources were elaborated within the framework of the ExternE project and CAFE programme (Clean Air for Europe Programme). The data on electricity production are available on SORS and Eurostat. The data on collective received radiation doses due to the operations of the nuclear power plant are collected by the Slovenian Nuclear Safety Administration
Data administrator: Environmental Agency of the Republic of Slovenia, Statistical Office of the Republic of Slovenia, Eurostat, Slovenian Nuclear Safety Administration.
Data acquisition date for the indicator: 8 December 2010.
Methodology and frequency of data collection: The data on annual emissions are collected by the Environmental Agency of the Republic of Slovenia promptly for each individual year (see EN01 and EN05 data sheets). In the calculation of the indicator for Slovenia, a methodology of calculation used by the EEA was implemented. The indicator of external costs is in this case calculated as the sum of all three influences that are connected with electricity production: the costs of climate change as a result of CO2 emissions; costs (impact on health and crops) connected to other air pollutants (NOx, SO2, NMVOC; PM10, NH3) and other non-environmental costs connected to electricity production from non-fossil fuels. In GHG emissions, the factor of marginal damage costs from the ExternE-Pol (2005) project was used for the lower assessment of costs; for the higher assessment of costs, the assessment from the Watkiss et al. (2005) research was used as the factor of marginal damage costs. For other emissions, the factor of marginal damage costs from the CAFE programme (Clean Air for Europe) was used for higher and lower assessments of costs. The factor of marginal costs for CO2 emissions is uniform for all countries (19 €/tCO2 – lower assessment and 80 €/tCO2 – higher assessment); marginal costs for other damage are specific for each individual country.

The assessment of external costs of electricity production from nuclear energy is based on the assessment of lost years of life due to negative radiation (DALY – Disability Adjusted Life Years). The assessment is based on the assumption of a very small probability of accidents. However, despite the small probability of huge damage to the environment and human health due to an accident, an assessment of costs of this scenario was left out within the ExternE project. In the DALY calculation, the probability 0.04 of deadly cancer for employees and 0.05 for the entire population was used, considering the collective effective dose (Edlund).

Data processing methodology:

Assessment of external costs per unit of produced electricity:

Cext- external costs of electricity production, E – annual emissions, MC - marginal damage factor, Qel – electricity production.

Assessment of external costs per unit of produced electricity, by energy sources:

Cextj – external costs of electricity production source , E – annual emissions caused by the source, MC – marginal damage factor, Qelj – electricity production from the source.

Information concerning data quality:
- Advantages and disadvantages of the indicator: The assessments of external costs are based on the assessment of marginal cost factors that was developed within the framework of the ExternE programme for CO2 emissions and on the assessment of marginal cost factors for other air pollutants, which were especially prepared for each country within the CAFE programme. The most problematic is the assessment of external costs of electricity production from the nuclear power plant, especially due to the conservative assumptions of its impact on the environment and human health; namely, the probability of the occurrence of an extreme event (accident) is very small.
- Relevance, accuracy, robustness, uncertainty:
Reliability of the indicator (archive data): The reliability of data on emissions is specified by the EN01 and EN05 data sheets.
Uncertainty of the indicator (scenarios/projections): Scenarios and projections are not available.
- Overall assessment (1 = no major comments, 3 = data to be considered with reservation):
Relevance: 1
Accuracy: 2
Completeness over time: 1
Completeness over space: 1

Other sources and literature:

- Clean Air for Europe (CAFE) Programme, 2005. Damages per tonne emission of PM2,5, NH3, SO2, NOx and VOCs from each Member State (excluding Cyprus) and surrounding seas.
- Edlund, O., 2001. Estimation of the years of lost life (YOLL) as a consequence of a nuclear fuel cycle.
- ExternE, 2005. Externalities of Energy.
- ExternE–Pol, 2005. Externalities of Energy: Extension of accounting framework and policy applications, report to the European Commission DG Research, technological development and Demonstration (Contract No: ENG1-CT2002-00609), produced by ARMINES/Ecole des Mines de Paris, et al..
- Watkiss, P. et al., 2005. The impacts and Costs of Climate Change. Final Report to DG Environment.

Date of data source summarization

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