Externalities from electricity generation and renewable energy. Methodology and application in Europe and Spain

This paper focuses on the measurements of externalities from electricity generation. Theseestimates are important for policy design, but they are also controversial because they involve puttingmoney values on environmental burdens and damages such as ill health and reduced life expectancy.We describe the methodology that has been developed to estimate the external costs of electricitygeneration in the EU and discuss some of the issues involved and how difficulties have been resolved.Following a «life cycle» approach, we provide estimates of external costs for the main fuel sources,including renewables, and we compare them. We also comment on the policy implications.