sectoral economic costs and benefits of ghg mitigation - IPCC

José R. Moreira
Discussion: Biomass Energy Externalities
José R. Moreira
1 General
Recent information (TAR, 1999; WEA, 2000) claims that 2% of the world energy supply is being
provided by non-traditional renewable energy sources. They include:
• liquid fuel from biomass;
• biomass co-combustion;
• wind energy;
• solar thermal for heat and electricity;
• solar photovoltaic;
• methane production from solid and liquid residues and waste;
• thermal generation from biomass;
• small hydro electric plants.
A gross accounting of the investment cost to supply energy to the world (Nakicenovic et al, 1998)
shows that to support an increase of 2% / year, which means 80% increase in the period 1990-2020
(320EJ) requires 14-18 trillion US$ or (14-18/320EJ) 44-56 billion /EJ. Presently, 8EJ are being
generated by non-traditional renewable energy sources which would demanded 352-450 US$
billion in investments, based in the average figure quoted above. Considering the amount of money
invested in R&D in this sector (which is 20 billion)(SAR,1996) we can say that the result is
remarkable.
Another conclusion is that the investment has not been supported by grants and low cost money
only. A significant share of the investment was made with private capital and should provide
gains.
2 Are the Private Costs the Only Aspect to Consider?
Relatively abundant literature exists today with the purpose to evaluate other costs not directly
charged on the price of energy but which are being paid by society. Payment by society is unfair,
since major energy users are subsidized by the minor ones. Such costs are called externalities.
Major externalities being evaluated account for the cost of local air-pollution, global air-pollution,
water contamination, health impacts and others. Externalities which are poorly accounted for are
the creation of new job opportunities and the reduction on country external debt.
Externalities evaluation cost is complex and requires much more R&D efforts. Presently, results
from studies are so different that they represent a motivation for decision-makers avoiding to take
any decision. Top down and bottom up approaches claim different advantages and difficulties, and
present unsatisfactory agreement.
Even so, it is worthwhile to quote some data regarding external costs as a way of calling the
attention of researchers and decision maker for the importance and size of them.
A) USA Indirect Profit from Ethanol Production.
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