Measuring multiple impacts of low-carbon energy options in a green economy context

• Published in: Applied energy 2016-10, Vol.179, p.1409-1426
• Main Authors: Ürge-Vorsatz, Diana, Kelemen, Agnes, Tirado-Herrero, Sergio, Thomas, Stefan, Thema, Johannes, Mzavanadze, Nora, Hauptstock, Dorothea, Suerkemper, Felix, Teubler, Jens, Gupta, Mukesh, Chatterjee, Souran
• Format: Article
• Language: English
• Subjects: Adverse side-effects; Co-benefits; Cost-benefit analysis; Energy efficiency; Green economy; Impact pathway; Multiple benefit quantification methodology; Multiple benefits; Quantification methods
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2016.07.027

•Including co-benefits into the cost-benefit analysis of energy options is pivotal.•This is not done mainly due to lack of adequate methods, this paper fills this gap.•We identify the key challenges to integrating co-impacts into cost-benefit analysis.•We propose a menu of solutions to each challenge.•An analytical framework systematically addressing interactions among co-impacts. The economic assessment of low-carbon energy options is the primary step towards the design of policy portfolios to foster the green energy economy. However, today these assessments often fall short of including important determinants of the overall cost-benefit balance of such options by not including indirect costs and benefits, even though these can be game-changing. This is often due to the lack of adequate methodologies. The purpose of this paper is to provide a comprehensive account of the key methodological challenges to the assessment of the multiple impacts of energy options, and an initial menu of potential solutions to address these challenges. The paper first provides evidence for the importance of the multiple impacts of energy actions in the assessment of low-carbon options. The paper identifies a few key challenges to the evaluation of the co-impacts of low-carbon options and demonstrates that these are more complex for co-impacts than for the direct ones. Such challenges include several layers of additionality, high context dependency, and accounting for distributional effects. The paper continues by identifying the key challenges to the aggregation of multiple impacts including the risks of overcounting while taking into account the multitude of interactions among the various co-impacts. The paper proposes an analytical framework that can help address these and frame a systematic assessment of the multiple impacts.