The hidden costs of energy and mobility: A global meta-analysis and research synthesis of electricity and transport externalities

Abstract

What is the range and scope of externalities associated with electricity supply, energy efficiency, and transport? What research methods and techniques of valuation does the community use to monetize these externalities? What policy implications arise in terms of better governing energy and mobility systems? To answer these questions, this study offers a comprehensive and global research synthesis of externalities for energy and mobility. It synthesizes data from 139 studies with 704 distinct estimates to examine the hidden social and environmental costs. The mean external cost for electricity supply is 7.15d/kWh. When correlating this with the actual amount of electricity generated per year, the amount is $11.644 trillion. This likely exceeds both the reported revenues for electricity sales, oil and gas production as well as the levelized costs of energy. The mean external cost for mobility is 17.8d/km. Using differentiated estimations of the externalities associated with aviation, road travel for passengers and freight, rail, and coastal water/marine modes of travel, transport's global externalities amount to another $13.018 trillion. When combined, this $24.662 trillion in externalities for energy and transport is equivalent to 28.7% of global Gross Domestic Product. Energy efficiency or demand response by contrast has net positive externalities of approximately 7.8d/kWh. When put into the context of global efficiency and demand management efforts, this approaches an annual positive value of $312 billion. The fundamental policy question is whether we want global markets that manipulate the presence of externalities to their advantage, or a policy regime that attempts to internalize them.