ࡱ> {Y bjbjWW L==? ]xxxx8ld 8 8 8 8 MtO<FHHHHHH$YMl!+"Ml=xx8 8 ===Jx88 8 FxxxxF==#&}: 8 4;F-hVEXTERNAL COSTS OF ELECTRICITY - CASE STUDY CROATIA COUTS EXTERNES D'ENERGIE ELECTRIQUE TEA KOVACEVIC, ZELJKO TOMSIC, NENAD DEBRECIN Faculty of electrical engineering and computing, Zagreb, Croatia SUMMARY External costs of electricity represent the monetary value of the environmental damage caused by electricity generation. Here they are calculated using the impact pathway method, which relates to a sequence of links between the environmental burden and its impact. Focus of this analysis was put on the effects of ambient air pollution on human health, as one of the priority impacts of electricity generation. Costs of health damage through air pollution caused by electricity generation in Croatia were calculated for two representative coal and natural gas power plants, that both comply with current EU emission standards. Both facilities are assumed to be located in the densely populated urban area of Zagreb, the Croatian capital. Since air pollutants are transported over large distances crossing national borders, their impacts are quantified both on the local level, i.e. within 50 km from the source, as well as for Croatia and the whole of Europe. The results are the following: the largest share in the damage costs accounts for mortality effects attributable to particulate matter, on local level directly while on the regional level in the form of subsequently formed sulfates and nitrates. That is why the damages linked to coal power plants are much larger than those linked to gas fired facilities. Health damages highly depend on the number of people affected, so the local damages are much lower than on the regional scale. Cost benefit analysis of NOx emission abatement technologies showed that strict emission standards in Croatia are necessary to mitigate the effects of transboundary pollution, where the large number of people is affected by a certain, though rather low, levels of pollution. RESUME Les couts externes de l'electricite, causes par la production de l'energie electrique, constituent des pertes monetaires pour l'environnement et la sante. Ici, les couts de deux centrales electriques (l'une au gaz naturel et l'autre au charbon) ont ete calcules en repondant aux standarts de L'Union Europeenne. Les effets les plus consequents sont les effets des matieres polluantes sur la sante. Cette observation a ete accomplie de telle sorte que les centrales electriques en question ont ete installees dans des localites de Zagreb et ou ont ete evaluees la dispersion locale et regionale des produits polluants. On a constate que les dommages les plus importants pour la sante sont causes par le resultat des matieres polluantes au niveau local et par le resultat des sulfates et des nitrates au niveau regional. De ce fait, les centrales electiques au charbon sont nettement plus couteuses que celles au gaz naturel. Vu que les degats dependent directement de l'ampleur de la population, les depenses externes regionales sont alors bien plus considerables. L'analyse des benefices des installations pour la diminution des emissions de NOx montre que les normes severes entreprises envers le SO2 et les NOx sont justifiees vu l'etendue des effets sur un grand nombre de la population. EXTERNAL COSTS OF ELECTRICITY - CASE STUDY CROATIA COUTS EXTERNES D'ENERGIE ELECTRIQUE TEA KOVACEVIC, ZELJKO TOMSIC, NENAD DEBRECIN Faculty of electrical engineering and computing, Zagreb, Croatia Abstract - External costs of electricity represent the monetary value of the environmental damage caused by electricity generation. The highest contribution to external costs have the effects of air pollution on human health. External costs due to health damage are here calculated using the impact pathway method, for two types of fossil fired power plants, located in Croatia. The scope of analysis covers Croatia and the whole of Europe. Cost-benefit analysis is made of applying the best available technologies (BAT) for emissions reduction in Croatia. The example is given for SCR (selective catalytic reduction) in comparison with low-NOx burners. 1. Introduction 1. Introduction External costs of electricity are the costs imposed on society and the environment that are not accounted for by the producers and consumers of electricity, i.e. that are not included in its market price. External costs should reflect the price of the environmental damage caused by electricity generation chain. They include damage to the natural and built environment, such as effects of air pollution on health, buildings, crops, forests and global warming; occupational disease and accidents; and reduced amenity from visual intrusion of plant or emissions of noise. Electricity generation chain embraces activities such as construction of new power plant, fuel extraction, fuel transport and processing, power generation, waste disposal and electricity transmission. The largest external costs within that cycle are those attributable to the power generation itself, i.e. at the power plant location, and thus are given highest priority. 2. Method description 2. Description de methode Impact assessment and valuation are performed using the 'damage function' or 'impact pathway' approach, which relates to a sequence of links between the burden and its impact. This approach assesses impacts in a logical and transparent manner, going stepwise as shown in  REF _Ref513559779 \h  \* MERGEFORMAT Figure I. 1. Emission quantification2. Atmospheric transport and dispersion3. Impact estimation (dose-response)4. Damage valuation (external costs) pollutionFigure  SEQ Figure \* ROMAN I Impact pathway method, (1( Image I Methode du chemin d'impact 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. In this analysis, the EcoSense model was used to assess damage costs caused by emissions from fossil-fired power plants in Croatia. It has to be stressed that environmental damage does not necessarily constitute in its entirety an external effect, so external cost might be different from the calculated damage cost. Impact pathway method requires a detailed description of the reference environment, which in this case includes meteorological conditions affecting dispersion and chemistry of atmospheric pollutants, functions linking exposure to a particular pollutant (i.e. pollutant ambient concentration) with the health effect it causes, population density and age structure in the observed area (locally and for the whole of Europe), and costs of the estimated health effects. Each of these steps inevitably incorporates a dose of uncertainty, due to atmospheric model imperfections, transferability of data from one context to another (e.g. extrapolation of exposure-response functions from the laboratory to the field and from one geographical location to another, transferability of monetary values from one country to another), the fact that some impacts cannot be quantified or monetized at all, etc. However, there is a consensus among experts that transference of input parameters and results is to be preferred to ignoring some impact categories. Focus of this analysis has been put on the effects of ambient air pollution on human health, as one of the priority impacts of electricity generation. Since the impact pathway methodology yields rather site-specific results, the analysis was conducted for the most representative power plant locations and most probable generation technologies. For locations this means choosing flat urban areas in the continental part of the country, while for technologies it assumes the best available ones that comply with environmental standards in Croatia and are considered to be candidates for future construction. The analyzed burdens relate only to routine emissions, while accidents are not taken into account. Since air pollutants are transported over large distances crossing national borders, their impacts are quantified not only on the local level, i.e. within 50 km from the source, but also for the whole of Europe. 2.1. The EcoSense software 2.1. Logiciel EcoSense The software used here for calculation of externalities associated with electricity generation is EcoSense, developed within the European Community project ExternE. EcoSense (2( was developed to support the assessment of priority impacts resulting from the exposure to airborne pollutants. It constitutes of several databases: technology, exposure-response and reference environment databases. The reference technology database holds a small set of technical data describing the emission source (power plant) that are mainly related to air quality modeling, including e.g. emission factors, flue gas characteristics, stack geometry and the geographic coordinates of the site. The impact assessment module calculates the physical impacts and the resulting damage costs by applying the exposure-response functions, based on receptor distribution and concentration levels of air pollutants from the reference environment database. EcoSense also provides two air transport models (local and regional), to cover different pollutants and different scales. One is The Industrial Source Complex Model (ISC, developed by the US-EPA), which is a Gaussian plume model used for transport modeling of primary air pollutants (SO2, NOx, particulates) on a local scale. The other is The Windrose Trajectory Model (WTM, developed in Harwell Laboratory, UK) used to estimate the concentration and deposition of acid species on a European-wide scale. 2.2. Emissions 2.2. Emissions The most important pollutants emitted from fossil-fuelled power plants are carbon dioxide (CO2), particulate matter (specially relevant for health effects are fine particles less than 10 and 2,5 microns in diameter respectively, so called PM10 and PM2,5), sulfur dioxide (SO2) and nitric oxides (NOx, i.e. mainly NO later oxidized to NO2). Apart from that, SO2 and NOx are subject to chemical transformations in the atmosphere, forming the so-called secondary pollutants: sulfuric and nitric acid (H2SO4 and HNO3), sulfate and nitrate aerosols and tropospheric ozone (O3). Both primary and secondary pollutants cause certain health effects, but here are considered only those for which the atmospheric modeling and the exposure-response functions are provided. Since modeling of ozone formation involves considerable complexity in both plume dynamics and chemistry, health effects associated with ozone are not quantified here. Impacts of global warming are not covered either because of the very different mechanism and global nature of impact. 2.3. Atmospheric dispersion and transport models 2.3. Modeles de dispersions atmospheriques et de transport On the local scale, i.e. within 50 km from the source, chemical transformations of pollutants can be neglected and thus their concentrations predicted using Gaussian plume dispersion models. These models assume source emissions are carried in a straight line by the wind, mixing with the surrounding air to produce pollutant concentrations with a Gaussian spatial distribution. One of them, used in EcoSense, is the Industrial Source Complex Short-Term model, version 2 (ISCST2) developed by the U.S. EPA. The area analyzed in the local dispersion is represented by 10 x 10 grid of quadratic cells each 100 km2 in size, with the power plant positioned in the grid center. The model calculates hourly concentration values of SO2, NOx and particulate matter averaged over one year at the center of each cell. Gaussian models require detailed description of meteorological data at the plant location provided by the user. They are valid up to 50 km from the plant. However, pollutant transport extends over much greater distances, when chemical reactions and formation of secondary pollutants can no longer be neglected. Therefore, different models are required for assessing long-range (regional) transport of pollutants, the most common are the Lagrangian trajectory models. Receptor-oriented trajectory model examines incoming trajectories of air parcels arriving from different directions to the receptor point (which is characterized by its mean annual windrose), moving at a representative wind speed and constant mixing height. European-wide transport of pollution is in the EcoSense software handled by the Windrose Trajectory Model. Europe is represented by a 42 x 27 matrix of large cells, each 10000 km2. The outputs from the model are atmospheric concentrations and deposition of emitted species and secondary pollutants in each grid cell. All input data required to run the Windrose Trajectory Model are provided by the EcoSense database. 2.4. Public health effects 2.4. Effets sur la sante de la population Combustion processes cause an increase in the concentration of certain atmospheric pollutants that might be causing adverse health effects within the general public. There is now a broad-based body of evidence showing small but definite increases in risks associated with increases in air pollution, with no convincing evidence of threshold. Acute health effects, which occur on the same day as increases in air pollution or very soon thereafter, should be distinguished from the chronic or delayed effects of possible long-term exposure. There are less exposure-response functions for chronic effects since they are more difficult to estimate than the acute ones. It should be stressed that the acute mortality effects occur predominantly in older people, almost certainly with serious pre-existing health problems, though the precise mechanism of action is not yet resolved. Length of life lost in those who die prematurely following higher pollution days is also unknown, but is likely to be short a few weeks or months. Averaged reduced life expectancy among those who die prematurely from chronic effects of air pollution is likely to be much greater and is measured in years. The incremental air pollution attributable to power generation is a mixture of pollutants emitted from a power plant and those formed subsequently in atmospheric chemical reactions. Complex studies were made to disaggregate that mixture and determine separate exposure-response functions for each pollutant (particles, SO2, NOx and ozone). Most of the exposure-response functions used in the EcoSense model are chosen from studies which showed statistically significant relationship between pollutant and health endpoint and which eliminated possible confounding factors due to other pollutants. The strength of these studies is that relationships, expressed as percentage change in health effect per unit exposure, seem remarkably invariant to changes in population, location and pollution mixtures. For ease of implementation, the exposure-response functions are linearized, assuming independence of background levels and no threshold existence. Extrapolation of exposure-response functions to very low pollution increments, particularly at distances far away from source, without a threshold, may lead to an overestimation of effects. Quantitative relationships have been established linking air pollution with a number of health endpoints. Health impacts are divided into three categories: mortality, morbidity and accidents. Only first two categories are observed here since they refer to normal operation of a power plant. It is dealt with premature mortality (acute and chronic), restricted activity days, hospital admissions due to respiratory and cerebrovascular problems, as well as emergency room visits due to exacerbation of asthma and chronic obstructive pulmonary disease (COPD). Here is how additional mortality and restricted activity days due to air pollution can be calculated, based on the given exposure-response functions: Mortality (number of cases) = exposure-response slope/100 ( baseline mortality ( population of the observed area ( pollutant concentration increase ((g/m3). Restricted activity days (number of days) = exposure-response slope/100 ( population of the observed area ( percentage of adults ( pollutant concentration increase ((g/m3). Impact categories together with exposure-response functions and monetary values are given in  REF _Ref513560065 \h Table I. Table  SEQ Table \* ROMAN I Summary of the exposure-response functions and monetary values (3( Tableau I Resume des effets utilises et resultats des valeurs monetaires (3( Impact CategoryMonetary value (EUR)(1)Pollutante-r slope (2)Receptor: Total populationAcute mortality(3)155.000PM10 and nitrates0,040%PM2,5 and sulfates0,068%SO20,072%NOx0,034%Chronic mortality(3)83.000PM10 and nitrates0,390%PM2,5 and sulfates0,640%Hospital admissions7.870PM10 and nitrates2,07(10-6respiratoryPM2,5 and sulfates3,46(10-6SO22,04(10-6NOx2,34(10-6Hospital admissions7.870PM10 and nitrates5,04(10-6cerebrovascularPM2,5 and sulfates8,04(10-6Emergency room visits223PM10 and nitrates13,7(10-6for asthma and COPDPM2,5 and sulfates22,8(10-6Receptor: Adults(4)Restricted activity days75PM10 and nitrates0,025PM2,5 and sulfates0,042(1) mortality values given at a discount rate of 3%, based on YOLL. (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 1,1%. (4) age group 14-65, in Croatia 68% of total population. 2.5. Monetary valuation of health effects 2.5. Estimation monetaire par rapport a la sante Health impacts are generally valued more highly than the conventional economic approach would suggest. 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. WTP or WTA is converted into the value of statistical life (VSL) dividing it by the change in risk. For example, if the estimated WTP is EUR 100 for a reduction in the risk of death of 10-4, the value of statistical life is estimated at 1 million EUR. However, increased air pollution can not actually cause 'additional' deaths it can only reduce life expectancy slightly. For deaths arising from illnesses linked to air pollution it is recommended to use years of life lost (YOLL) calculation, while VSL approach only for valuing fatal accidents and cases where general population is affected and not only risk groups. Value of one year of life lost (vYOLL) can be determined from the VSL estimate, applying the formula below, if one knows the age of the reference group and the discount rate to be applied to present vs. future years of life.  EMBED Equation.3 , where: r discount rate (usually 3%), Tl number of years of life lost. If e.g. life expectancy for a prime age male is assumed 37 years and if VSL equals 3,1 million EUR, value of YOLL turns out around 100.000 EUR with zero discount rate, i.e. 134.000 EUR with discount rate of 3%. Morbidity impacts valuation is based on the cost of illness, that comprises the value of time lost due to the illness (valued through lost wages), the value of the lost utility because of pain and suffering and the costs of any expenditures on averting and mitigating consequences of illness. 3. Application of the impact pathway method on Croatia 3. Methodes adaptees en Croatie The aim of the analysis made here is to estimate the costs of health damages through air pollution caused by electricity generation in Croatia. Two types of fossil-fired power plants are observed, one coal and one natural gas fired facility, since they are among candidates for future power system expansion. Both power plants are assumed to comply with domestic and European Unions emission standards, so the emission rates equal the upper emission limits. Basic technical end environmental data are given in  REF _Ref513458807 \h  \* MERGEFORMAT Table II. Both facilities are assumed to be located in the densely populated urban area of Zagreb, the Croatian capital. Geographical coordinates of the site are 16( E and 45,8( N. Impact analysis on the local level, i.e. within 50 km from the source, displays a local (so called fine) grid with 100 km2 large cells, the average pollutant increment ((g/m3) in each cell and the total number of health events in the whole local grid. To calculate atmospheric dispersion on the local level, hourly meteorological data for the plant site are required, while for estimation of health impact population density in each cell of the local grid is needed. Table  SEQ Table \* ROMAN II Technical data and emission rates of the analyzed power plants Tableau II Resultats techniques et emissions des centrales electriques analysees Coal facilityNatural gas facilityGross/net capacity380/350 MW370/350 MWHours on full load6570 h/yr6570 h/yrFlue gas volume1,2E+6 m3/h2,1E+6 m3/hFlue gas temperature403 K403 KStack height200 m200 mStack diameter6 m6 mEmissionsmg/m3g/kWhmg/m3g/kWhParticulates500,16800SO24001,34300NOx6502,1821000,6CO22,45E+5822,90,43E+5258,55 The basic meteorological data for Zagreb monthly temperature extremes and frequency of wind speeds and wind directions (so called windrose) in the 15-year sequence are obtained from the Croatian State Meteorological and Hydrological Service. Since no continuous measurements of wind and temperature were available, and because some additional parameters describing atmospheric conditions are needed for local dispersion modeling, meteorological data set had to be constructed before imported into the EcoSense. Average annual windrose for Zagreb and an approximation of daily temperature curve for each season are given in  REF _Ref450368150 \h  \* MERGEFORMAT Figure II. Figure  SEQ Figure \* ROMAN II Annual windrose and approximated temperature daily flow at Zagreb site Image II Rose des vents annuelle et approximation des temperatures journalieres sur la localite de Zagreb Zagreb is not a very windy area, which can be concluded from rather high frequency of calms (13%). The prevailing winds are from north (19%) and northeast (11%). The largest average wind speeds, occurring in northeasterly and southwesterly directions, do not exceed 3 m/s (at 10 m above ground). According to the demographic data for Zagreb and Croatia, population density in the outer city area (comprising 4 cells around the plant, altogether 400 km2) is set to 3000 people/km2, while in the remaining 96 cells to 100 people/km2. Average population density in Croatia equals 85 inhabitants/km2. 3.1. Estimation of external costs due to operation of the analyzed power plants 3.1. Estimation des couts externes causees par le travail des centrales electriques 3.1.1. Local analysis 3.1.1. Analyse locale Based on power plants emission rates and local meteorological data, average annual concentrations of SO2, NOx and particulates on the local level were calculated, using the ISCST2 local dispersion model, incorporated in EcoSense. Spatial distributions of pollutant increments within 50 km of the coal power plant are shown in the figures below. The highest concentrations occur in the very grid cell where the plant is situated and in cells downwind the stack, i.e. southwest from the plant. The highest concentration of particulate matter amounts to 0,083 (g/m3, the highest NOx is 1,1 (g/m3 while SO2 0,7 (g/m3 ( REF _Ref450217807 \h  \* MERGEFORMAT Figure III).  Figure  SEQ Figure \* ROMAN III Ambient concentration increase of particulate matter due to coal power plant Image III Augmentation des concentrations ambiantes de matieres polluantes causees par le travail des centales electriques To calculate health impacts in the analyzed area, the concentration field for each pollutant has to be multiplied by the population field and the appropriate exposure-response coefficient. Health impacts have no common measure, mortality is expressed either in number of cases or in years of life lost, while morbidity in number of events or number of days. To sum them all up in a single number, health effects should be monetized, i.e. multiplied by their monetary values. Spatial distribution of the monetized health damage due to particulates-caused pollution, per unit of electricity generated in the power plant, is shown on the right-hand side of  REF _Ref450112363 \h  \* MERGEFORMAT Figure IV. Mortality impacts are here valued using YOLL.  Figure  SEQ Figure \* ROMAN IV Spatial distribution of particulates concentration and monetized health damages Image IV Repartition des concentrations des matieres polluantes et valeurs monetaires par rapport aux problemes de sante The level of health effects decisively depends on the number of people affected. Here the largest health damages occur in the four grid cells around the power plant, where the population density is 3000 persons/km2 (densely populated urban area). Health damages in other grid cells are almost negligible, due to 30 times lower population density and lower pollution increments at larger distances from source. Health damages also much depend on the way mortality is valued if calculated via VSL damages are several times higher than via YOLL. The largest portion of damage costs, over 90%, account for mortality endpoints.  REF _Ref479689427 \h  \* MERGEFORMAT Table III gives local damage (external) costs per unit of electricity produced and of pollutant emitted from a coal and a gas fired power plant. Total local costs due to air pollution (particulates, SO2 and NOx), caused by coal power plant, amount to around 1 mEUR/kWh (YOLL). The majority (85%) of the health damage cost comes from PM10. Damage cost factor for PM10 is around 5000 EUR per ton. It means that 1 ton of PM10 emitted from the power plant causes health damage of 5000 EUR. The rest of health damage is caused by SO2, with the damage cost factor of 1000 EUR per ton. It turned out that gas-fired power plant causes no health impacts, because NOx in its gaseous form (which is the only emitted effluent) is still not proved to cause health effects. 3.1.2. Regional Analysis 3.1.2. Analyse regionale In the regional analysis it 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. Example: Sulfates spatial distribution ((g/m3) Source: coal power plant, location Zagreb frame: includes Croatia  0,000 ( 0,000  0,000 ( 0,001  0,001 ( 0,002  0,002 ( 0,012  sea surface  out of scopeFigure  SEQ Figure \* ROMAN V Ground-level regional distribution of sulfates caused by operation of coal power plant in Zagreb Image V Repartition regionale des sulfates causee par le travail des centrales electriques a Zagreb After examining several locations, possible for future power plants, a range of external costs was obtained. Results are shown in  REF _Ref479689427 \h  \* MERGEFORMAT Table III. More detailed analysis can be found in (4(. Table  SEQ Table \* ROMAN III External costs: summary of results Tableau III Couts externes: resume des resultats Coal fired facilityGas fired facilityScope: local (2 million people)mEUR/kWhEUR/tmEUR/kWhEUR/tParticulates (PM10)0,844.99500SO20,1511000NOx((((Total local*0,99Scope: Croatia only (4,8 million)mEUR/kWhEUR/tmEUR/kWhEUR/tParticulates (PM10)0,26 ( 0,291.566 ( 1.73600SO2 (including sulfates)0,52 ( 0,83390 ( 62100NOx (including nitrates)0,56 ( 1,74257 ( 7960,16 ( 0,49267 ( 824Total Croatia*1,34 ( 2,860,16 ( 0,49267 ( 824Scope: Europe (540 million)mEUR/kWhEUR/tmEUR/kWhEUR/tParticulates (PM10)1,76 ( 2,6410.482 ( 15.73000SO2 (including sulfates)12,35 ( 13,979.200 ( 10.40500NOx (including nitrates)20,91 ( 24,919.584 ( 11.4156,25 ( 7,4010.422 ( 12.333Total Europe*35,53 ( 41,526,25 ( 7,4010.422 ( 12.333* health damages due to tropospheric ozone (precursor: NOx) not included. Note: 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 in the ExternE study are set to the uniform value of 1.500 EUR 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 EUR per ton of CO2. The geometrical mean value was taken as the best estimate for global warming damages: 29 EUR/t. However, since external cost estimations for ozone and CO2 are very uncertain, they are not included in further analysis. Regional scale calculation of health effects has to include also impacts of secondary pollutants - sulfates and nitrates. If the power plant is located in Zagreb, its operation would cause a health damage of 2,65 mEUR/kWh, assuming that the scope of receptors includes only Croatian population. If the site of the power plant changes (several candidate locations are observed), health damage ranges from 1,3 to 2,9 mEUR/kWh. The gas fired power plant would cause the health damage of 0,3 mEUR/kWh if it is located in Zagreb, while the damage would be in the range of 0,16 to 0,49 mEUR/kWh for other candidate sites. So the damage caused by gas power plant is around 8 times less than of coal power plant. If the scope of analysis is the whole of Europe, i.e. around 540 million people, health damage costs associated with the coal power plant located in Croatia rise to 35-40 mEUR/kWh, while the costs of gas fired facility to 6-7 mEUR/kWh. The associated external cost factors for sulphur and nitrogen pollutants both are around 10.000 EUR per ton. It means that 1 tone of SO2 i.e. NOx emitted from the power plant causes damage of around 10.000 EUR. Average damage cost, i.e. damage cost per capita for the observed region, is calculated as:  EMBED Equation.3  where i - grid cell index, concentration(i) - pollutant concentration in grid cell i, population(i) - number of people in grid cell i, fe-r - exposure-response function. The first factor on the right-hand side of the above equation is the weighted concentration, the key factor in calculating average damage cost for the selected region. Average damage cost (EUR per capita) is obtained by multiplying the weighted concentration by the exposure-response factor and the monetary value of the observed impact. Average damage cost for the analyzed coal power plant located in Zagreb is given in  REF _Ref513543678 \h  \* MERGEFORMAT Table IV. Table  SEQ Table \* ROMAN IV External cost of the coal power plant depending on the scope of analysis Tableau IV Couts externes des centrales electriques au charbon par rapport au dimension de l'analyse CroatiaEurope totalmEUR/kWh2,6536,01EUR/capita1,2730,153SO2*0,4910,053NOx*0,5340,091Particulates0,2480,009* incl. both primary and secondary pollutants It must be noted that the European-wide calculation is obtained with the assumption that exposure-response functions do not have threshold values, i.e. that even the smallest increase in pollutant concentration causes a certain health effect. Therefore, the obtained rather high values for health damage are most probably overestimated. For this reason the scope of the analysis was limited to include only the population exposed to concentrations higher than 20% of the maximum. Since in this analysis concentrations below 20% of the maximum mean extremely low values, we can assume that people exposed to such doses are practically not affected. Regional dispersion analysis for nitrates showed that 13% of the European population is exposed to concentrations higher than 20% of the maximum ( REF _Ref513542337 \h  \* MERGEFORMAT Figure VI, left-hand side). According to EcoSense software calculations, those people suffer 50% of the total damage caused by nitrates ( REF _Ref513542337 \h  \* MERGEFORMAT Figure VI, right-hand side).  Figure  SEQ Figure \* ROMAN VI Damage costs depending on the number of people observed Image VI Depenses des degats par rapport a l'ampleur de la population In accordance with the previously said, it can be assumed that 50% of the total damage cost (European-wide) calculated with EcoSense can be associated to Croatian power plants. The same rule - 50% damage - can be applied for SO2. That means damage estimate will include all people exposed to concentrations higher than 15% of the maximal concentration of sulphur compounds. With those assumptions, health damage cost amounts to 5000 EUR/t both for NOx and SO2 - half of the previously calculated 10.000 EUR/t. This figure includes not just the impact on Croatian population but also the part of European population exposed to concentrations higher than 20%, i.e. 15% of the maximal. 3.2. Cost-benefit analysis of the NOx emission abatement measures 3.2. Analyse couts/benefices des mesures pour la diminution de l'emission de NOx To demonstrate one possible application of external costs, cost-benefit analysis is made of adopting stricter emission standards and BAT principle, in line with EU harmonization. For example, NOx emission standard for large stationary sources (incl. power plants) currently equals 650 mg/m3, both in Croatia and EU (5(, but there are initiatives to reduce it to 200 mg/m3. In Germany, for example, the lower value is already in power. The question is whether the value of 200 mg/m3 is cost efficient for Croatia. The 650 mg/m3 standard can be met by applying only primary measures, so called Low-NOx burners, while 200 mg/m3 standard requires selective catalytic reduction of flue gases (SCR filter). SCR is the best available technology nowadays to reduce NOx emissions, with the ability to eliminate 85% of the NOx in flue gas, unlike Low-NOx which can reduce NOx emissions by only 25 % ( REF _Ref513545776 \h  \* MERGEFORMAT Table V). From the cost data given in  REF _Ref513545776 \h  \* MERGEFORMAT Table V yearly cost of NOx abatement devices can be calculated. Yearly cost of Low-NOx measures amounts to 0,5 million EUR, while of SCR device 7 million year. The costs difference is 6,5 million EUR/yr. Table  SEQ Table \* ROMAN V Costs of possible NOx abatement measures in a coal power plant Tableau V Depenses des moyens hypothetiques pour la diminution des emissions de NOx Abatement Capital costFixed O&M* Var. O&MTotal costNOx abatement processfactor(EUR/kWe)(EUR/kWe)(10-3 EUR/kWhe)(MEUR/yr)catalytic reduction (SCR)85 %700,520,5non-catalytic reduction (SNCR)50 %100,20,72burner modification (Low NOx)25 %15007* operation and maintenance cost sources: Environmental Manual v1.1, Oeko Institut, Darmstadt, 1998; Pollution Prevention and Abatement Handbook, World Bank, 1998; Argonne National Laboratory, USA & US EPA, 1998. Cost-benefit analysis of SCR device can be made by comparing the additional cost needed for SCR device (compared to cost of Low-NOx burner), with the benefits gained (less health damage) due to lower NOx emissions. Health damage associated with NOx is calculated in the previous analysis. Table  SEQ Table \* ROMAN VI External costs for two different NOx emission levels Tableau VI Couts externes pour les deux niveaux d'emissions Scope of analysisAverage damage cost (EUR/capita)External cost (M EUR/yr)External cost differenceAdditional cost of SCR NOx = 650 NOx = 200NOx = 650NOx = 200(M EUR/yr)(M EUR/yr)Europe total0,0910,02849,015,133,96,5Croatia0,5340,1642,550,781,776,5* expressed in mg/m3 External cost, i.e. health damage of NOx, is proportional to NOx emission. If the average health damage at the emission of 650 mg/m3 amounts to 0,534 EUR/capita (scope Croatia), then at 200 mg/m3 it amounts to 0,164 EUR/capita. The difference is 0,37 EUR/capita, which multiplied by the number of people (4,8 million) gives 1,77 million EUR ( REF _Ref513553267 \h  \* MERGEFORMAT Table VI). That is the avoided health damage in Croatia due to applying SCR device instead of Low-NOx measures. By analogy, similar calculation can be made if the scope is the whole population of Europe, i.e 538 million. In that case, the difference in external cost equals 33,9 million EUR. If we assume the relevant damage cost for Croatian power plants is half of the total damage cost calculated by EcoSense, as discussed above, the avoided damage cost if SCR device is installed, would amount to around 17 million EUR per year (0,5(49,0 - 0,5(15,1).  Figure  SEQ Figure \* ROMAN VII Cost-benefit analysis of SCR device depending of the scope of analysis Image VII Analyses couts/benefices des installations SCR par rapport a l'ampleur de l'analyse Additional cost of SCR device equals 6,5 million/yr. The external cost benefits are 1,77 million if only the scope of Croatia is observed, 17 million EUR if 50% of the total damage is taken as relevant, i.e. 33,9 million EUR if the whole of Europe is included ( REF _Ref513555641 \h  \* MERGEFORMAT Figure VII). This means that SCR becomes cost effective only if the population in Europe is also included in damage cost evaluation. Benefits to Croatian population are not enough to justify for installing SCR. Avoided long-range environmental and health effects are exactly the reason why protocols on long-range transboundary pollution exist, and why emission standards may be stricter than local environmental effects would require. 4. The role of external costs in the context of liberalized power markets 4. Roles des couts externes sur le marche liberal d'energie electrique The original idea of external costs was to serve as means to integrate environmental aspects into decision making. In central power system planning such approach meant adding external costs to the direct costs and optimizing the capacity mix on the basis of total (direct + external) costs. On a deregulated and liberalized power market, however, such practice is not feasible. Nowadays, external costs have to be "internalized" by new, market-adjusted instruments. Nevertheless, external costs can still be used for various cost-benefit analyses and comparisons. The most recent use of external costs is for cost-benefit analysis of different emissions trading scenarios. Namely, if CO2 emission reduction is achieved by domestic measures, there are secondary benefits due to reduction of other pollutants, such as SO2, NOx and particulates, that usually go together with CO2. Secondary benefit in that case is the avoided health and environmental damage. In the case of emissions trading, if a country is a net buyer of emission permits, secondary benefits will not be utilized. Therefore, cost-benefit analysis is needed to compare the cost savings achieved by emissions trading with the not-utilized secondary benefits that would occur by achieving CO2 reduction domestically. 5. Conclusion 5. Conclusion Evaluation of externalities, better say damages, using the impact pathway approach is comprehensive but also a very site-specific routine. Since this paper is one of the first attempts to evaluate electricity externalities in Croatian power system, the focus was put on priority impacts for Croatia. Those are health effects of air pollution caused by coal and gas fired facilities, which are candidates for construction in the following 30 years. 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 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. Cost benefit analysis of NOx emission abatement technologies showed that strict emission standards in Croatia are justified to mitigate the effects of transboundary pollution, where the large number of people is affected by a certain, though rather low, levels of pollution. 6. References 6. References (1( ExternE - Externalities of Energy, EC EUR 16521 EN, DG XII, Brussels, 1995. (2( EcoSense 2.0 User's Manual, Institut fr Energiewirtschaft und Rationelle Energieanwendung (IER), Universitt Stuttgart, 1997. (3( European Commission, DGXII: ExternE Project, Methodology Report, 2nd Edition, Brussels, 1998. (4( Tea Kovacevic: Environmental damage cost, master thesis (in Croatian), Faculty of electrical engineering and computing, Zagreb, 2000. 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