‘Economic injury’: How the UK’s electricity and transport networks could be racking up £264bn in hidden societal costs

'Economic injury': How the UK's electricity and transport networks could be racking up £264bn in hidden societal costs
'Economic injury': How the UK's electricity and transport networks could be racking up £264bn in hidden societal costs

Exclusive: Researchers have sought to calculate the external environmental, social and health costs of from fossil fuels, renewables, road transport and aviation

The additional environmental, social, and health costs that fossil fuels, road transport, aviation, and renewable electricity impose on UK society have been totted up in new analysis today, which estimates the unaccounted for bill to British taxpayers at a staggering £264bn a year.

Researchers from the University of Sussex Business School and South Korea’s Hanyang University sought to estimate the external costs of the UK’s energy and transport sectors which are not met by the industries themselves but are indirectly paid for by the public.

The authors calculated the huge additional costs lumped onto society by the transport and electricity sectors’ contribution to climate change, air pollution, land degradation, noise, and biodiversity damage, as well as health and social costs, with the estimated total bill coming to £264bn.

That includes more than £154bn in hidden costs to society and the environment related to transport and mobility, with the lion’s share of those externalities attributed to road passenger transport at £127bn, with aviation the second biggest contributor at £25bn.

The UK energy sector, meanwhile, is estimated to be responsible for £110bn in total additional unaccounted for costs every year, which researchers said was more than three times the entire £30bn annual revenues of the domestic electricity industry.

Questions surrounding the wider external costs of industrial activities have long been the subject of intense debate in academic and policymaking circiles, with the process of calculating such costs proving to both extremely complex and hugely contentious. Some experts maintain externalities are routinely under-estimated, others counter that the discount rates used to try and assign future value point to a fixable problem that could be addressed through astute and relatively modest pricing of externalities. Yet while the failure to price in the costs of greenhouse gas emissions was famously described by economist Lord Nicholas Stern as the biggest market failure in history, attempts to bring in carbon pricing measures worldwide such as taxes and emissions trading schemes have had only limited success to date.

Co-author of today’s study Benjamin K. Sovacool, a professor of energy policy at the University of Sussex Business School, said the combined £264bn estimated bill for the UK was “shockingly more than the country invests into the NHS each year – and it underscores how much social and economic injury our energy and transport systems cause”.

“It’s yet even more sobering evidence that the UK needs to move away from fossil fuels and ambitiously pursue rapid decarbonisation,” he added.

Natural gas was found to be the biggest contributor to power sector externalities at £34bn, followed by nuclear energy at £24bn, coal at £8.3bn and oil at £600m, according to the research.

But alongside waste-to-energy, which accounts for £9.3bn in annual costs, coal power produced the highest proportion of externalities in relation to the amount of energy they created due to the high levels of air pollutants they emit compared to other energy sources, the researchers found.

However, renewable power sources also account for around 40 per cent of the energy sector’s total externalities, with bioenergy’s estimated costs at £14.5bn each year, just ahead of wind at £14.3bn, while solar power accounted for £5.1bn in costs and hydropower just £1bn, the research shows.

The authors cited electronic waste generation and the sand needed for producing silicon as major external costs for solar power, while bird and bat fatalities, as well as land use and construction accidents, were among the top unaccounted for costs for wind power.

Study co-author Professor Jinsoo Kim from Hanyang University, said the analysis indicated that negative external costs from the UK’s power mix were decreasing due as the electricity system progresses towards cleaner forms of generation such as renewables. But he warned that “substantial negative externalities remain, including those from renewable sources, which can be generated by negative impacts such as aesthetics, noise, and harming biodiversity”.

“Expanding renewable power generation is unquestionably the key to tackle the climate crisis but the UK government and the energy sector need to choose renewable locations carefully to limit externalities,” he explained. “The UK is a global leader in offshore wind planning and that is a good choice for minimising externalities despite the higher initial investment compared to other renewable sources.”

The estimates are based on synthesis research published in the Energy Research & Social Science journal last month, which analysed almost 140 studies containing over 700 distinct estimates of externalities worldwide. That study sought to find the range and scope of unexpected societal costs and benefits from economic activities for which there is no proper compensation, covering power supply, energy efficiency and transport. Worldwide, it estimated electricity systems would generate over $11.6tr in annual externalities, with the bill as high as $13tr for transport. In contrast, it found energy efficiency measures boasted annual positive externalities of $312bn per year.

Researchers from the University of Sussex and Hanyang University then used that framework to calculate the annual costs of these externalities to the UK by taking the extra costs associated with each energy source and multiplying it by its projected total supply for a year.

Minyoung Yang, a doctoral scholar at Hanyang University and another of the study’s co-authors, said she hoped the findings would provide “useful guidance the UK government when it considers the costs basis for infrastructure investment for the future”. “The case for increased UK investment in wind is strengthened when the relative low level of externalities it generates is added into the calculations,” she explained. “On the other hand, the UK’s continued high investment in roads, including £27bn at the last budget, becomes an even poorer value-for-money decision when its significant hidden costs are also factored in. Roads already account for 83 per cent of the UK’s transport externalities and further investment in the UK roads network will only raise that figure higher.”

It follows analysis from the Carbon Tracker earlier this month, which warned plans to build a new generation of gas power plants in the UK could derail climate targets and waste up to £9bn of investment, as clean energy technologies already offer the same services as lower monetary and environmental cost. The think tank also followed up that analysis yesterday with research drawing similar conclusions about gas power plans in Italy, the UK’s co-hosts for COP26 later this year.

It is certainly challenging to draw up precise calculations for the health, societal, and environmental costs that transport and energy impose on society. Yet mounting evidence has consistently shown that fossil fuels and unsustainable resource use are taking a heavy toll on the planet, the air we breathe, and even the food systems we rely on. And given the enormous importance of these resources for human survival, properly accounting for and pricing in the damage infrastructure and industry causes remains both a planetary and economic priority. The big thing about market failures is that eventually they need fixing.

This content was originally published here.