Life-cycle consequences of internalising socio-environmental externalities of power generation

Current national energy sectors are generally unsustainable. Within this context, energy policy-makers face the need to move from economy- to sustainability-oriented schemes. Beyond the integration of the sustainability concept into energy policies through the implementation of techno-economic, environmental and/or social restrictions, other approaches propose the use of externalities -based on life-cycle emissions- to deeply take into account sustainability in the design of the future energy system. In this sense, this work evaluates the consequences of internalising socio-environmental externalities associated with power generation. Besides the calculation of external costs of power generation technologies and their implementation in an energy systems optimisation model for Spain, the life-cycle consequences of this internalisation are explored. This involves the prospective analysis of the evolution of the sustainability indicators on which the externalities are founded, i.e. climate change and human health. For the first time, this is done by endogenously integrating the life-cycle indicators into the energy systems optimisation model. The results show that the internalisation of externalities highly influences the evolution of the electricity production mix as well as the corresponding life-cycle profile, hastening the decarbonisation of the power generation system and thus leading to a significant decrease in life-cycle impacts. This effect is observed both when internalising only climate change externalities and when internalising additionally human health external costs.