Covered impacts

The ExternE methodology aims to cover all relevant (i.e. not negligible) external effects. However, in the current state of knowledge, there are still gaps and uncertainties. The purpose of ongoing research is to cover more effects and thus reduce gaps and in addition refine the methodology to reduce uncertainties. Beside environmental impacts, which are quantified using the impact pathway approach, currently global warming impacts, accidents and energy security are included in the methodology. Following the included impact categories are described:

  • Environmental impacts:
    Impacts that are caused by releasing either substances (e.g. fine particles) or energy (noise, radiation, heat) into the environmental media: air, soil and water. The methodology used here is the impact pathway approach.
  • Global warming impacts:
    For global warming, two approaches are followed. First, the quantifiable damage is estimated. However, due to large uncertainties and possible gaps, an avoidance cost approach is used as the recommended methodology.
  • Accidents:
    Accidents are rare unwanted events in contrast to normal operation. A distinction can be made between impacts to the public and occupational accident risks. Public risks can in principle be assessed by describing the possible accidents, calculating the damage and by multiplying the damage with the probability of the accidents. An issue not yet accounted for here is the valuation so-called ‘Damocles’ risks, for which high impacts with low probability are seen as more problematic than vice versa, even if the expected value is the same. A method for addressing this risk type has still to be developed.
  • Energy security:
    If unforeseen changes in availability and prices of energy carriers occur, this has impacts, for instance on economic growth. A first attempt to estimate the order of magnitude of the resulting external costs has been made in the project ‘ExternE-POL’, however the methodology is currently revised within the project ‘CASES’.

In addition, there are a number of issues that are sometimes seen as important for the decision process, but are – at least according to the opinion of the ExternE team – not external costs. These include:

  • Impacts on employment:
    Employment is influenced by the labour market; thus impacts on employment are not, according to economic theory, external costs. However, they nevertheless are usually an important argument in any investment decision. In general it is more the change of the distribution of working places that might have an important local effect. However, these effects are currently not included in ExternE and thus have to be taken into account separately within the decision making process.
  • Depletion of non-renewable resources:
    According to Hotelling’s theory the depletion of exhaustible resources is considered in the prices of the resources, thus costs of depletion are internal. However, if one assumes that the current interest rates are higher than the social preference rate that should be used for social issues, then some adjustment should be made. However, this is not yet considered within ExternE.

To apply the ExternE methodology, a software package called EcoSense is used. EcoSense provides harmonised air quality and impact assessment models together with a database containing the relevant input data for the whole of Europe.

In general, dependent on the question to be answered, the analysis is not only made for the operation of the technology to be assessed as such, but also including other stages of the life cycle (e.g. construction, dismantling, transport of materials and fuels, fuel life cycle).