Wind Power in the UK (PDF). - Sustainable Development Commission

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Wind Power in the UK (PDF). - Sustainable Development Commission

4 Costs and benefits of windgeneration costs by about 0.05p/kWh. Whilstlarge amounts of new wind energy wouldpush up costs by more than this amount, a‘level playing field’ demands that 0.05p/kWhshould be deducted from the net additionalsystem costs identified above.Calculating carbon benefitsAs CO2 is harmful to the global climate, the costsof climate change can and should be attributedto emissions resulting from human activity. It isthis principle that is behind calls for carbontaxation, and efforts to create a market foravoided carbon in the form of the EU EmissionsTrading Scheme – so that a price is attached toCO2 emissions.In 2003 the Government published itsassessment of the ‘social cost of carbon’ 42 tohelp give a value to carbon emissions in theabsence of full-scale carbon taxation, for whenpolicies are being developed. The value agreedon by Government was a range of £35-140 pertonne of carbon (tC), with a middle value of£70/tC. This translates to £9.55-38 per tonne ofCO2 (tCO2), with a middle value of around£19/tCO2. However, the Government alsoacknowledged that such estimates are hugelyvaried and that such large-scale harm is difficultand controversial to measure accurately. Arevised analysis is expected in the near future.The social cost of carbon is very different fromthe market price of carbon, which is operating inthe EU Emissions Trading Scheme. The marketprice in the EUETS is dependent on the allocationof permits by EU Governments and theperformance of companies in the scheme, but iscurrently trading at around £10/tCO2 and istherefore at the lower end of the Government’srange for the social cost of carbon.As wind energy is a CO2-free energy source thatmust compete against fossil fuel alternatives, itCarbon Vs CO2Carbon emissions are often quoted in twoways: in tonnes of carbon dioxide (tCO2) andin tonnes of carbon (tC). A tonne of CO2contains less carbon than a tonne of carbondue to its chemical composition. Theconversion formula is:1 tCO2 = 0.273 tCor1 tC = 3.66 tCO2Therefore, when converting carbon values thesame formula must be used:Eg. £1 /tCO2 = £3.66 /tCseems reasonable to try and account for the‘social cost’ from CO2 emitted by conventionalpower generators and subtract this from thesystem cost of wind. This is particularly relevantwhen the system cost calculations above do nottake account of the market price of carbonstemming from the EUETS.To do this one must make some assumptions asto how much carbon wind energy output isdisplacing. There are large differences betweenthe CO2 emissions associated with coal (243tC/GWh) compared to natural gas (97 tC/GWh),with none associated to nuclear power. Asalready explained, it would be unrealistic toassume that wind energy would displace anynuclear capacity, and it is most likely that it willdisplace coal in the short to medium term.However, the actual CO2 displacement in 2020 ishard to estimate and so for the purpose of thisreport, it has been assumed that wind outputwill displace the average emissions resultingfrom gas-fired plant. This figure is likely to beconservative, as in reality some coal-firedgeneration is likely to exist in 2020. However, itis the figure that the DTI use and is used here sosustainable development commissionWind Power in the UK 35

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