The Social Cost of Energy: External Cost Assessment for Turkey

Abstract

The social or full costs of energy sources, which include the external cost plus the private cost, are the most important criteria for energy and environmental policy making. Energy policy making is concerned with both the supply side and the demand side of energy provision. On the energy supply side, deciding on alternative investment options requires the knowledge of the full cost of each energy option under scrutiny. On the demand side, social welfare maximisation should lead to the formulation of energy policies that steer consumers' behaviour in a way that will result in the minimisation of costs imposed to society as a whole. Demand-side policies can benefit significantly from the incorporation of full energy costs in the corresponding policy formulation process. The geographical dimension is also important since environmental damage from energy production crosses national borders. Hence, a consistent set of energy costs allows a better understanding of the international dimensions of policy decisions in these areas. This paper, focusing on classical pollutants, tries to assess external costs from human health damages, damages to buildings, crop losses and from biodiversity impacts. To this aim, first, emissions data have been drawn from European Monitoring and Evaluation Programme (EMEP) database. Then, these emissions data have been transformed into monetary terms using the results of cost assessment for sustainable energy systems (CASES) project for the years 2000 and 2010. The results have been discussed in the context of energy and sustainability.