External costs of energy-intensive facilities (2021)

Methodology: The VOLY methodology is used to calculate the external costs of industrial air and GHG emissions. This is an estimate of external costs based on the potential years of life lost from a specific risk, based on an estimated life expectancy, and then evaluated by multiplying the figure by the value of a life year (VOLY). Since it is based on bottom-up facility emissions data from the European Pollutant Release and Transfer Register (E-PRTR), it includes emissions from energy produced on site (auto-generation) and process emissions. It excludes upstream emissions from energy purchased elsewhere and downstream emissions, including from transport and handling of goods. See the technical note in EEA (2024a) for further details on the methodology.  

Underestimation of external costs: The EU Emissions Trading System (EU ETS) price was not included in these external cost calculations. GHG-related external costs are partially internalised via the EU ETS, since emitters incur costs for allowances that reflect part of the climate-related damage. For GHGs, the calculated impact is not a direct assessment of damage but a proxy for climate change impacts based on the cost of abatement of carbon emissions required to meet the main target of the Paris Agreement (limiting global warming to 1.5-2°C above pre-industrial levels, UNFCCC, 2015). The rationale behind this proxy is that for each tonne of carbon dioxide equivalent (CO2e) emitted, a tonne will need to be reduced elsewhere to achieve the Paris Agreement target. However, because the methodology estimates GHG impacts using this proxy rather than the full extent of climate change impacts, the external costs presented here are likely underestimated. In addition, some countries — notably Czechia, Malta, Lithuania and Slovakia — are missing as they had not submitted E-PRTR data for 2021 when the EEA assessment (2024a) was finalised.  

The map is a screenshot from the source; the dynamic map includes tooltips with facility names, sectors, total external costs and rankings).