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Negative externalities: example of
King Coal
Filip Černoch
cernoch@mail.muni.cz
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
9000000
World consumption of coal (thousands of short tons, EIA)
History of coal usage
• The first known depleted coal mine Fu Shun in China in 1000 BC. 300
BC Theophrastus described combustion of coal in Greece. Romans
used coal in 400 BC.
• Coal substituted wood (charcoal) in glass and metal production – first
energy revolution.
• Deforestation of London surroundings in 1200, by 1500 production
moved to Ireland, Scotland, Wales.
• Coal depletition at Newcastle upon Tyne – spreading the mining
activities across the country.
• 1352 coal first internationally traded commodity.
• Start of industrial revolution, steam engine, production of steel, coke.
• In navy shift from sails to steam.
• In 1910 coal represented 60% of world energy mix, declining between
world wars.
Environmental impacts
• Mining (opecast/surface mines) – land use, water and air pollution,
dust. Impact on biotops and landscape. Noise. Aestethical damages.
• Preparation for further processing – removal of impurities – acids,
heavy metals, chemicals are released.
• Transport – dust from coal, transport-related pollution.
• Workers – exposition to the dust and chemicals, mining risks.
• Coal combustion – GHG, primary pollutants, smog, acid rains.
• Solid waste – ash.
Air pollutants and their effects
Name Source Effects (esp. on human)
Particulate
matter
(PM)
Combustion, industrial
processes, wind erosion,
atmospheric reactions of
gases, transport
Respiratory: asthma development (suspected), asthma
exacerbation, chronic obstructive pulmonary disease,
stunted lung development (PM2.5), lung cancer;
Cardiovascular: cardiac arrhythmias, acute myocardial
infarction, congestive heart failure (PM2.5).
Nervous system: ischemic stroke.
Volatile
organic
compounds
(VOC)
Incomplete combustion
of fossil fuels,
evaporation of solvents
and gasoline, emission
from plants
Organic chemicals in varied forms (eg. benzene,
chlorofluorocarbons…).
Carcinogenic, ozone formation
Carbon
monoxide
(CO)
Incomplete combustion
of fuels
Poisonous because of ability to bind to hemoglobin and
block oxygen delivery to tissues.
Visual impairment, reduced work capacity, reduced manual
dexterity, poor learning ability, difficulty in performing
complex tasks.
Air pollutants and their effects
Name Source Effects (esp. on human)
Nitroge
n oxides
(NOx)
Combustion
of fuels
Asthma development (suspected), asthma exacerbation, chronic
obstructive pulmonary disease, stunted lung development;
cardiac arrhythmias, ischemic stroke.
Reacts with VOCs in sunlight to form ground- level ozone
Increases an amount of nitrogen in soil and country – change of
diversity. In aquasystems causes eutrophication. Increases acidity
of soil and water.
Sulfur
oxides
(SOx)
Combustion
of sulfur-
containing
fuels (coal)
Can affect respiratory system and lung functions, aggravation of
asthma and chronic bronchitis, make people more prone to
infections of the respiratory tract; irritation of eyes; cardiac
disease aggravated; ischemic stroke risk. Contributes acid rain.
Other
element
s
Nickel, mercury, arsen, chromium, cadmium, lead, florine,
chlorine
Secondary pollution
• London smog
• Smoke and fog, typically in winter (combination with inversion). SO2 + PM
(soot) + vater wapour = transport of gaseous matters of smog to the lungs.
• http://www.youtube.com/watch?v=bSlwGIapFJI
• Photochemical smog
• Primary pollutants (NOx + Volatile Organic Compounds created during fossil
fuel combustion) interacts under the influence of sunlight = ozon O3 plus other
pollutants.
• Ozone – bronchial constriction, coughing, wheezing, respiratory irritation, eye
irritation, decreased crop yields, retars plant growth, damages plastics…
• Accid rains
• Acidic rains caused by emissions of sulfur dioxide and nitrogen oxide = with
water produce acids.
Emissions Amount of pollutants (in
tons per 1TWh – 1000MW
plant for 1000hrs)
SO2 2600
NOx 2800
Representative 1000MW coal power plant = 6 million tons
of CO2 per year = equivalent of 2 million cars. Plus 2 670
000 tons of ash.
In CR production of around 40 TWh of electricity from
coal, installed capacity around 11 700 MW. (2014).
Health impacts of coal combustion
Externalities
• A consequence of an economic aktivity that is experienced
by unrelated third parties. An externality can be either
positive or negative.
• (Pigouvian) taxes/subsidies
• Command and control solution
• Ownership rights
Coase theorem
• If trade in an externality is possible and there are sufficiently
low transaction costs, bargaining will lead to an efficient
outcome regardless of the initial allocation of property.
Coase theorem
Uneffective if:
• there are many affected parties, so it is expensive to coordinate the
necessary contracts for the sale of property rights.
• one person can block the sale, regardless of the costs actually
imposed on them.
• enforcement of the contract is too expensive, such as the costs of
court proceedings if there is a breach of contract.
• the costs of monitoring the offending behavior are high.
Situation in the Czech Republic
Situation in the Czech Republic
Externalities of electricity production
0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0
Dětmarovice
Počerady
Hodonín
Mělník II
Mělník III
Mělník I
Poříčí
Tisová I, II
Prunéřov I
Prunéřov II
Ledvice
Tušimice II
Chvaletice
Kč/kWh
budovy a materiály zemědělská produkce nemocnost úmrtnost změna klimatu
Source: Centrum pro otázky životního prostředí UK
Price of electricity in 2003 – 3-5 kč/kWh
In Kč/kWh for selected energy sources in 2003
Solution of the ´coal problem´?
• Source substitution.
• Higher efficiency of coal combustion.
• Reduction of coal pollutants during the process.
Sources
• IEA: Medium Term Coal Market Report 2015
• EIA: International Energy Statistics, 2015.
• HEAL: The Unpaid Helth Bill: How Coal Power Plants
Make Us Sick, 2013