ࡱ> Oh+'0(4LXl     The expected accelerated development of transition countries (CEE/NIS) requires sufficient amounts of energy, particularly electricityhe Tea Kovacevicccea  Normal.dotiTea Kovaceviccc107Microsoft Word 8.0r@ꜽ$@Fǿ@R=ƿ@BE{R :0Program Files 0Microsoft Office0TemplatesN<@,@:i+00/C:\0Program Files 0Microsoft Office0TemplatesCO :i+00/C:\0Program Files 0Microsoft Office0TemplatespmC<@"(jr煚#ÑC&9"(''8MᰧEXTERNAL COSTS OF ELECTRICITY: FROM AIR EMISSIONS TO HEALTH DAMAGE Tea Kovacevic, Zeljko Tomsic, Nenad Debrecin Faculty of electrical engineering and computing, Dpt. of Power Systems Unska 3, 10000 Zagreb, CROATIA e-mail: tea.kovacevic@fer.hr Introduction External costs of electricity refer to the costs of damage imposed on society and the environment by an electricity generation chain, but not accounted for in the market price of electricity. Electricity generation impacts include effects of air pollution on health, buildings, crops, forests and global warming; occupational disease and accidents; and reduced amenity from visual intrusion or emissions of noise. Effects of air pollution on human health are the most significant among them. The equivalent monetary value of health damage, i.e. external cost, is calculated here for two types of fossil fired power plants, located in Croatia, with the analysis covering the local and the European-wide scope of effects. Method Description Because of their diverse character, electricity generation impacts are expressed in a common measure, so called external costs. External costs can be calculated using the so called impact pathway methodology, which relates to the sequence of events linking a burden to an impact, and subsequent valuation. The impact pathway methodology consists of the following steps: (i) quantification of emissions, (ii) calculation of the associated ambient concentration increase by means of atmospheric dispersion and transport models, (iii) estimation of physical impacts using various exposure-response functions, and (iv) finally monetary evaluation of damages. The tool used to assess external costs caused by power plant operation is the EcoSense software (1(. Focus of this analysis is put on the effects of ambient air pollution on human health, as one of the priority impacts of electricity generation. Since air pollutants are transported over large distances, crossing national borders, their impacts are quantified both for population in Croatia and for the whole of Europe. Europe is mapped onto a grid comprised of 100x100 km sized cells, i.e. receptors. Long-range transport and dispersion of pollutants is assessed by a Lagrangian trajectory model, which examines incoming trajectories of air parcels arriving from different directions to the receptor point. The outputs from the model are atmospheric concentrations and deposition of emitted species and secondary pollutants in each grid cell. Incremental air pollution attributable to power generation is a mixture of pollutants emitted from stack (particulate matter, sulfur dioxide, nitrogen oxides) and those formed subsequently in chemical reactions in the atmosphere (sulfate and nitrate particles, and tropospheric ozone). Both primary and secondary pollutants cause certain health effects, mostly connected to respiratory and circulation problems. Quantitative relationships have been established linking air pollution with health endpoints ( REF _Ref479668762 \h Table 1). Acute effects occur on the same day as increases in air pollution or very soon thereafter, while chronic effects are delayed and develop as a result of long-term exposure. More susceptible to symptoms are older people and those who suffer from respiratory diseases, e.g. asthmatics. Increased air pollution can not really cause 'additional' deaths, it can only reduce life expectancy. Length of life lost in cases of acute mortality is likely to be short - a few weeks or months. If mortality is caused by chronic illness, life reduction is considered to be several years. Here is the example of how additional mortality and restricted activity days can be calculated based on the given exposure-response functions: Mortality (number of cases) = exposure-response factor/100 ( baseline mortality ( population of the observed area ( pollutant concentration increase ((g/m3). Restricted activity days (number of days) = exposure-response factor/100 ( population of the observed area ( percentage of adults ( pollutant concentration increase ((g/m3). Table  SEQ Table \* ARABIC 1 Summary of exposure-response functions and monetary values (2( Impact CategoryMonetary value (ECU) (1)PollutantExposure-response factor (2)Acute mortality (3)155.000PM10 and nitrates0,040%(expected life reduction: 9 months)PM2,5 and sulfates0,068%SO20,072%Chronic mortality (3, 4)83.000PM10 and nitrates0,390%(expected life reduction: 12 years)PM2,5 and sulfates0,640%Hospital admissions,7.870PM10 and nitrates2,07(10-6respiratory problemsPM2,5 and sulfates3,46(10-6SO22,04(10-6Hospital admissions,7.870PM10 and nitrates5,04(10-6cerebrovascular problemsPM2,5 and sulfates8,04(10-6Restricted activity days (4)75PM10 and nitrates0,025PM2,5 and sulfates0,042(1) mortality values given at a discount rate of 3%, based on years of life lost; 1 ECU = 1,25 US$ (1999). (2) slope of the exposure-response function is expressed in percentage change in annual mortality rate per unit of pollutant concentration increase (% change per (g/m3) for mortality, while in number of events per person per (g/m3 for morbidity. (3) baseline mortality in Croatia is 11 per 1000. (4) age group 14-65, in Croatia 68% of total population. Mortality impacts can be valued based on the willingness to pay (WTP) for reduction of the risk of death, or on the willingness to accept compensation (WTA) for an increase in risk. One year of life lost is estimated at 98.000 ECU, if no discounting is applied. If the discount rate is set to 3%, which is recommended for environmental damage valuation, money loss in case of acute death is 155.000 ECU, while 83.000 ECU if a fatal outcome is caused by a chronic illness. Morbidity impacts are valued based on medical treatment cost and lost wages. Application of the Impact Pathway Method on Croatia The aim of the analysis made here was to estimate costs of health damages through air pollution caused by two possible power generation technologies in Croatia in the near future: coal and natural gas fired facilities. Reference power plants, one coal and one gas combined cycle (CC) unit, are assumed to comply with current domestic emission standards [6], so the emission rates equal the upper emission limits. Both power plants are same in size, 350 MW net capacity, while their emission data are given in  REF _Ref450279940 \h Table 2. Table  SEQ Table \* ARABIC 2 Emission rates of the analyzed power plants EmissionsCoal firedNatural gas firedmg/m3g/kWhmg/m3g/kWhParticulates500,1500SO24001,2100NOx6501,971000,52CO22,84E+58620,66E+5344It was observed how each of those two power plants, if placed at a certain location in Croatia, would affect (a) population in Croatia, and (b) the whole of Europe. Power plants were moved across the country to check how the external costs vary with location. To determine the health impacts on population in Croatia only, grid cells belonging to Croatia were isolated in the matrix of results. The total affected population in Croatia is 4,8 million, while in the whole of Europe around 540 million. Spatial distribution of primary and secondary pollutant concentrations, combined with population distribution and the appropriate exposure-response functions is used to calculate health impacts on the population in Croatia and Europe and the associated external costs due to operation of the observed two power plants. After examining several locations, possible for future power plants, a range of external costs was obtained. Results are shown in  REF _Ref479689427 \h Table 3. More detailed description of the method and the results can be found in [9]. Table  SEQ Table \* ARABIC 3 External costs: summary of results Coal fired facilityGas fired facilityScope: Croatia only (4,8 million)mUS$/kWhmUS$/kWhParticulates0,29 ( 0,330SO2 (including sulfates)0,59 ( 0,930NOx (including nitrates)0,63 ( 1,960,18 ( 0,54Total*1,51 ( 3,220,18 ( 0,54Scope: Europe (540 million)mUS$/kWhmUS$/kWhParticulates1,99 ( 2,950SO2 (including sulfates)13,93 ( 15,720NOx (including nitrates)23,59 ( 28,106,91 ( 8,16Total*39,51 ( 46,776,91 ( 8,16* health damages due to tropospheric ozone (precursor: NOx) not included. The obtained external costs comprise only health impacts due to airborne emissions (particulates, SO2, NOx). Impacts of ground-level ozone, which is caused by NOx, and of global warming, caused by greenhouse gases, are not included. Due to lack of reliable ozone models, external costs of NOx via ozone are set to the uniform value of 1.500 ECU per ton of NOx for the whole of Europe. External costs of global warming are subject to large uncertainties, so they vary from 3,8 to 139 ECU per ton of CO2. The geometrical mean value was taken as the best estimate for global warming damages: 29 ECU/t. External costs of power generation in fossil fuelled power plants are obtained as the sum of (i) airborne emissions damages, which are site specific, (ii) ground-level ozone damages that are for now considered uniform for the whole of Europe, and (iii) global warming damages that are considered uniform in the whole moderate climate zone. Those numbers are given in  REF _Ref479695362 \h Table 4. Table  SEQ Table \* ARABIC 4 Cases depending on the level of external costs included in optimization External cost (mUSD/kWh)Case namecoal gas nuclear 3,22 0,54 0,1External cost Croatiacoal: 46,77 + 3,69* gas: 8,16 + 0,98* nuclear50,46 9,14 0,1External cost Europe (including ozone damage)coal: 46,77 + 3,69* + 30,05** gas: 8,161 + 0,98* + 12,47** nuclear***80,51 21,61 0,1External cost Europe-total (including ozone and global warming damage)* due to tropospheric ozone, ** due to global warming, *** based on [8]. External costs can be included in power system expansion planning, i.e. selection of the optimal future capacity mix. They can be added to production costs of candidate generation units and in that way incorporated into the optimization goal function. Such exercise was conducted in the following analysis. The aim was to find the capacity mix with the lowest annual production costs, which still complies with the given requirements. The effect of external costs on the optimal expansion plan On the basis of electricity consumption forecast and scheduled retirements of the existing power plants, projections of the needed new generating capacities have been made. It turned out that additional capacity of 4500 MW will have to be installed in the period 2001-2030. Fossil-fired (coal and natural gas) and nuclear power plants, together with several hydroelectric facilities, are chosen as candidates for system expansion. All candidate power plants are designed to comply with current environmental standards in Croatia. Coal units will be equipped with electrostatic precipitators for particulates removal and with wet scrubbers for desulphurisation. Low-NOx combustion measures will be applied to reduce NOx emissions to the allowable levels. The existing power plants will not be equipped with any additional emission abatement devices before they are retired. Annual production costs are obtained as a sum of levelized fixed costs (comprised of annual capital cost recovery and yearly fixed maintenance cost) and annual variable costs (comprised of fuel cost and variable maintenance cost). In the selection process of the optimal capacity mix in the following 30-year period four cases were observed, each with different external cost value added to direct costs of expansion candidates. In the first case no external costs were added, so the optimization was conducted based on direct costs only. In the second case, called Ext. costs Croatia, the calculation was made with the external cost for Croatia, as given in  REF _Ref479689427 \h Table 3, which means that only damages within Croatia are taken into account. The upper value in the range was chosen following the conservative approach. The third case incorporated the external costs for the whole of Europe, plus the average ozone damage for Europe (Ext. costs Europe). In the fourth case, Ext. costs Europe(tot, the external costs from case 3 were increased by the value of global warming damages. The list of cases and the attached external costs is given in  REF _Ref479695362 \h Table 4. It has to be stressed that external costs are added only to candidate and not the existing units, because the purpose of this analysis was to examine the influence of external costs on resource selection and not on power system operation. Therefore, once the optimal capacity mix is determined, it is assumed that facilities are dispatched according to their direct costs, i.e. the economic loading order. In other words, external costs here are not meant to be imposed on any party, neither the producer nor the customer, and therefore should not affect the price of electricity. The optimal capacity mixes in those four cases are shown in  REF _Ref479998364 \h Figure 1, as cumulative values for the entire planning period. In all cases it is supposed that natural gas availability is unlimited.  Figure  SEQ Figure \* ARABIC 1 Total added capacity by fuel, depending on the external cost level If no external costs are added, the optimal capacity mix consists only of gas CC power plants, since they have the lowest direct costs. Adding the external costs for Croatia would not affect the optimal solution much, because gas fired power plants would still have the lowest total costs. However, if the value of external costs is high enough, optimal expansion plan does get strongly affected. That happens in the third and fourth case, where European-level external costs are added. In the third case, where no global damages were included, three nuclear units enter the optimal capacity mix, whereas in the fourth case, where the global warming damages are also included in the cost function, optimal solution involves even four nuclear units. Figure  SEQ Figure \* ARABIC 2 Emissions of NOx and CO2 in the observed period The structure of new capacities is reflected on emission levels, as shown in  REF _Ref444665934 \h  \* MERGEFORMAT Figure 2. If there is no nuclear facilities installed, emission follow an upward trend. Emissions of NOx in the year 2001 are expected to be 10 kilotonnes. During the observed period they would triple if only gas facilities are built. Only if more nuclear units are deployed, NOx emissions could be kept at low levels, around 20-30% percent higher than today. An additional very important consequence is that CO2 emissions are decreasing as well, although no direct measures to reduce CO2 are applied. Croatian commitment in Kyoto is to start reducing total countrys CO2 emissions so that the average value in the period 2008-2012 is 5% lower than in 1990, and that the emissions are kept at that level afterwards. The corresponding requirement for the power sector is to reduce CO2 emissions to 7,1 million tonnes per year. The average CO2 emission in the period 2008-2012 would be around 6,8 Mt/year. This value is similar in all cases since bigger differences occur only in the second half of the planning period, with the retirement of the existing units. Although the value is below the Kyoto limit, the rising emission trend suggests the goal of long-term reduction would not be met. Only the case with large share of nuclear power could keep CO2 emissions below the Kyoto limit in the long run. Conclusions This paper is one of the first attempts to evaluate electricity externalities in Croatian power system, therefore the focus was put on priority impacts. Those are health effects of air pollution caused by coal and gas fired facilities, candidates for construction in the following 30 years. It has to be stressed that external costs of coal power plants can be lowered by further reducing their emissions, i.e. by applying more efficient abatement technologies already available on the market. Of course, that would induce some additional direct costs. The results show that damages linked to coal power plants are much larger than those linked to gas fired facilities, since the latter are responsible only for NOx emission and nitrates. The largest share in the damage costs accounts for mortality effects. The highest damages are attributable to particulate matter, on the local level directly while on the regional level in the form of sulfates and nitrates. Health damages highly depend on the number of people affected that is why local damages (within 50 km from the source) are much lower than on the European scale. When incorporated into electricity system expansion planning, the local external costs do not significantly influence the optimal capacity mix, but the regional external costs do so in a great deal. With regional external costs added, competitiveness of coal units gets largely reduced, so they lose battle with nuclear units. Therefore, it is very important to define geographical scope within which the impacts should be internalized, since that can seriously influence decision making in the country of emissions origin. References (1( EcoSense 2.0 User's Manual, Institut fr Energiewirtschaft und Rationelle Energieanwendung (IER), Universitt Stuttgart, 1997. (2( ExternE National Implementation Germany, Final Report, IER, Stuttgart, 1997. 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