The first step in categorizing potential benefits and costs is determining the relevant scope of the analysis. We have concluded that, at this level of analysis, it is appropriate to limit the scope to the benefits and costs associated with the types of electricity generation that offshore wind, waves, and ocean currents might be displacing. Therefore, we consider externalities associated with offshore alternative energy plus those associated with coal, natural gas, oil, nuclear, and conventional hydroelectric power.
Furthermore, at this level of analysis we do not see significant differences in the types of benefits and costs associated with the offshore alternative energy resources, and thus consider them as a single type. Similarly, we group together the fossil fuel-based generation alternatives (coal, gas, and oil). Nuclear and conventional hydropower has sufficiently distinguishing characteristics to consider each separately.
In order to capture all relevant benefit and cost categories associated with electricity generation, we classify externalities in life cycle subcategories, including construction; fuel acquisition and transportation; operations and maintenance; and waste and decommissioning. We also organize benefits and costs into four broad categories (environmental, socioeconomic, national energy security, and human health). Given our externality focus, we do not consider taxes or subsidies. Subsidies are transfer payments between the government and producers, and are thus internalized into production decisions (by producers and by society), putting them beyond the scope of this analysis. Note that we refer to “net” changes associated with a particular externality, reflecting the fact that an externality potentially has positive and negative components (e.g., the economic effects of climate change, which may be positive in some areas and negative in others).
Each mode of electricity generation results in a broad range of life cycle benefits and costs. Rather than develop a comprehensive list of these externalities, we develop a general categorization of the most significant benefits and costs in terms of presumed magnitude. Given a lack of available information in some cases, the decision to include or exclude certain benefits and costs is based in part on professional judgment. We recognize that there are specific impacts (particularly potential costs) that may be viewed as especially significant by certain stakeholders, but that we have not included in our taxonomy (e.g., the potential for offshore projects to alter the character of waves reaching shore in a way that diminishes surfing experiences). While we acknowledge the potential relevance of such impacts, our analysis is focused on those benefits and costs that we believe are most likely to have the most significant influence (positive or negative) on whether a project is net beneficial.
Environmental Externalities.
Positive and negative externalities associated with the environment fall into two general categories. The first includes the direct physical impacts of electricity generation and related activities, including the impact of the “footprint” of generation facilities. Examples of these impacts include inundation of habitat by a reservoir formed behind a conventional hydroelectric dam, landscape scarring caused by mining operations, and bird mortality associated with wind turbines. A second category of environmental impact involves benefits and costs associated with the generation of atmospheric emissions and waste streams released to the natural environment, particularly during operation of a generation facility. Non-greenhouse gas emissions cause environmental degradation and health effects, while greenhouse gases may produce a wide variety of impacts associated with climate change. Other considerations include the potentially negative human health and environmental effects associated with discharges of hazardous waste and once-through cooling water.
Socioeconomic Externalities.
Socioeconomic externalities associated with the electricity generation include a wide range of social, cultural, and direct economic impacts. For example, during one or more phases of electricity generation life cycle there can be positive or negative impacts related to view sheds, regional tourism, recreational activities, and cultural resources. In general, well-established methodologies exist to measure or estimate the magnitude of these impacts.
National Energy Security Externalities.
National energy security externalities include the potential risks to national security of providing potential targets for terrorism and the potential benefits associated with increasing U.S. energy independence. Risks to national security can be based on vulnerability to either large-scale human health impacts (e.g., by targeting nuclear facilities) or energy supply disruption, resulting in destabilizing impacts on regional economies (e.g., from targeting sensitive critical elements of the energy infrastructure). The more concentrated an electricity source (e.g. a 1,000 megawatt nuclear facility versus distributed photovoltaic cells in residential areas), the greater potential for significant economic impacts.
Human Health Externalities.
Human health externalities are associated with (1) the generation of atmospheric emissions and waste streams (e.g., greenhouse gases, sulfur dioxide (SO2) emissions, mining wastes released to surface water), and (2) the impact of low-probability, high-risk events (e.g., catastrophic nuclear accidents). In a comparison of emitting and non-emitting energy alternatives, we can tally either the costs associated with emissions from fossil fuel combustion or the benefits of avoiding emissions through the use of alternative energy resources.
