Energy Cities proposition 03 - Ensure public budgets integrate positive and negative energy externalities
Empowering local players
2014
Energy Cities is a network of more than 1,000 cities in 30 different countries. Convinced that energy transition is more than a question of renewable energy or advanced technologies, Energy Cities proposes to use resources in a reasoned way, to strengthen local participation and to improve the quality of life in a democratic Europe. In 2014, the network presents 30 proposals for the Energy Transition of Territories.
They are a source of inspiration to think and act differently. To finally turn the page on unsustainable practices that lead us into energy, climate and perhaps economic and social dead ends.
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Energy Cities proposition 03 - Ensure public budgets integrate positive and negative energy externalities
The problem at hand
All investment decisions have an impact on material and energy resources as well as on discharges, emissions and other types of waste. The impact in terms of security, health, air quality and predation of resources will differ depending on the source of energy considered. Some decisions will boost employment, whilst others will reduce manpower needs.
We call “externalities” the cost of the consequences of these micro-economic decisions paid for by society. The externality is said to be positive when the decision avoids societal costs on the natural, social and economic environment. It is negative when it involves additional societal costs for repairing damage to the ecosystem or in terms of lost jobs.
The “polluter-payer” principle means “internalising externalities”, that is, making the person responsible for the damage pay for it, via an energy tax or through a waste management or water treatment system. But many areas remain unaccounted for. We therefore do not hold all the cards for making the right decisions.
Proposal
Present public budgets that integrate positive and negative externalities.
Ideally, this calculation should apply to all budget items. But calculation bases accepted by all stakeholders in a given country are rare. Lighter systems could be used in a more realistic way, on a one-project basis, by applying an externality cost to the energy prices or to CO2 emissions.
Conditions for success
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Starting with a few symbolic projects to make decision-makers familiar with the impact of their decisions.
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Trying to calculate costs based on carbon tons avoided or generated, as data is available and price scenarios can be simulated.
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Associating financial officers so that they become familiar with these issues.
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Gathering information about existing experiences in countries that have adopted relevant schemes.