By Peter Vajda, Environmental Expert, Energy Community
External costs of energy generation
Whether talking about the effects of global or local changes in climate, health problems caused by air pollutants or the sustainability of our modern lifestyle in general, energy policies and the decisions taken therein always have a major impact. Generally, the discussion tends to focus on three key issues, namely affordability (energy price), security of supply and sustainability of energy systems.
Several stakeholders consider that the affordability and security of supply elements support a strong argument for fossil fuel-based energy generation by thermal power plants. Therefore, it is often heard in the debate that energy security based on domestic resources shall be the prime concern of a national energy policy, preserving jobs in the energy sector and ensuring an electricity price that is affordable to everyone.
Sustainability is definitely considered, but only as a distant third.
It must be kept in mind, however, that the external costs of unabated emissions are tremendous and these costs are borne by society as a whole – via health implications and premature deaths, reduced crop yields, damage to buildings, forests, agricultural land etc. A prominent example of this bare economic logic is contemporary China, where people in heavily polluted cities literally pay for clean air by buying canisters of imported “mountain breeze” from the rural parts of the country as well as from abroad. People unable to pay for the canisters also do so in fact, but in their case with their own health.
While we are not in the same situation when looking at the Energy Community Contracting Parties, prominent problems do exist. A study carried out in 2013 by the Energy Community Secretariat found that for most Contracting Parties, the benefits of implementing the requirements of the Large Combustion Plants and Industrial Emissions Directives outweigh the costs more than 15 times. This is a remarkable number that clearly indicates that both in the Western Balkans and in Eastern European countries, there is a major economic case for emission reduction.
However, if we base our assessment on the assumption that turning away from coal would inevitably mean that countries have to give up their energy security, it will inevitably result in misleading conclusions. Moreover, if we look at coal as the only guarantee for energy security, that is a well-paved way towards a lock-in scenario, with investing into even more, non cost-reflective capacities that would continue dominating the energy sector of countries for decades to come.
The need for public support
Simply put, reducing emissions results in a healthier and longer life in a better environment. Therefore, any investment into emission reduction – either via emission abatement technologies, energy efficiency measures or alternative generation capacities – is also an investment into the quality of life of the individual as well as into our future. It is vital that citizens understand and identify with these objectives and therefore gathering broad public support for emission abatement is crucial.
The role of civil society is highly important in this process. Civil society organisations, doing awareness raising campaigns and informing the local public on the real costs of fossil fuel-based energy generation can do highly valuable work in driving the public opinion to make it much more sensitive beyond the sheer considerations of energy price.
The way forward and the role of the Energy Community
The Energy Community is one of the key drivers in lowering emissions from the energy sector. The Energy Community Treaty brings together the European Union with the six Western Balkans countries as well as with Moldova, Ukraine and, with its imminent accession to the Treaty, Georgia. The three key aims of this international treaty are establishing solutions for an enhanced level of security of supply, creating conditions for the better functioning of energy markets as well as increasing sustainability.
The environmental package adopted by the Ministerial Council on 14 October 2016 strongly underpins the third, sustainability pillar of the Energy Community, with introducing the Strategic Environmental Assessment and Environmental Liability Directives into the Energy Community legal framework, updating the Environmental Impact Assessment and Sulphur in Fuels Directives and adopting a Recommendation on a monitoring mechanism for greenhouse gas emissions. This is a clear sign that this community is turning more and more into an energy and environmental one, which also confirms that these policies are strongly interlinked.
When talking about interlinkages, the issue of climate change cannot be circumvented either, as energy and climate policy are in fact the two sides of the same coin. The impacts of these trends are already visible, and it is also universally accepted in the scientific community that climate change acts as a threat multiplier on many different issues, ranging from natural disasters (such as the devastating floods in Western Balkans countries in 2014) via deforestation and land-use change to migration.
Energy transition is always difficult. It requires commitment, investment, negotiations and a lot of day-to-day work. In the end, however, a far better result than the business as usual scenario can be attained.
The Energy Community Secretariat embarks on the fascinating, at the same time highly challenging task of emission reduction and energy transition together with the Contracting Parties. It is admittedly not an easy task and the analogy of a prisoner’s dilemma comes to mind, whereby game theory concludes that it pays always better off for individuals not to cooperate. At the same time, it was also concluded by the same theory that while non-cooperation might be profitable in a one-off situation, in the long run, cooperation always pays (far) better off than self-isolation. At the Energy Community Secretariat, we honestly believe that we will manage to find viable and beneficial solutions together.
Dislaimer: “The views expressed are solely of the author and do not necessarily represent the views of the Energy Community Secretariat.”