Internalizing the external cost of gaseous and particulate matter emissions from the coal-based thermal power plants in India

Abstract

External cost or negative externality is a cost that a transaction or activity imposes on a party that is not part of the transaction or activity. In the present work, an attempt is made to calculate the external cost per unit of electricity generation from coal-based power plants in India due to the emissions of SO2, CO2, NOx and Particulate Matter. Purchasing Power Parity and population density correction factor are considered for the estimation of external cost to suit Indian economic and demographic conditions. Total external cost due to release of emissions from nine states having more coal-based power plants in India during the year 2018 is estimated to be INR 19.5 trillion and unit external cost of coal-based electricity generation is estimated to be INR 2.92. The cost of power generation from coal-based power plants in India with and without considering the external cost is estimated till the year 2030. Comparison is also made between the cost of solar power generation and coal-based thermal power generation. It is predicted that the cost of solar power generation without energy storage is cheaper than the power generation from coal-based power plants if the external cost of power generation is included in the cost.