LCA and external costs in comparative assessment of electricity chains : decision support for sustainable electricity provision?

Abstract

The provision of energy and electricity plays an important role in a country's economic and environmental performance and the sustainability of its development. Sustainable development of the energy and electricity sector depends on finding ways of meeting energy service demands of the present generation that are economically viable, environmentally sound, and socially acceptable and do not jeopardize the ability of future generations to meet their own energy needs. As liberalized electricity markets are becoming widespread, according to neo-classical welfare economics, getting the prices right is a prerequisite for market mechanisms to work effectively towards sustainable development. Life Cycle Assessment (LCA) and external cost valuation are considered to offer opportunities to assist energy policy in a comprehensive comparative evaluation of electricity supply options with regard to the different dimensions of sustainable energy provision as well as in the implementation of appropriate internalisation strategies. The paper addresses life cycle assessment and external cost analysis carried out for selected electricity systems of interest under German conditions. Results from a comprehensive comparative assessment of various electricity supply options with regard to their environmental impacts, health risks, raw materials requirements as well as their resulting external cost will be summarized. The use of LCA based indicators for assessing the relative sustainability of electricity systems and the use of total (internal plus external) cost assessment as measure of economic and environmental efficiency of energy systems will be discussed. Open problems related to life cycle analysis of energy chains and the assessment of environmental damage costs are critically reviewed, to illustrate how in spite of existing uncertainties the state of the art results may provide helpful energy policy decision support.