Valuing Externalities of Coal Power Plants in Western Visayas using Benefit Transfer Method


by: Elaine Grace B. Fernandez


This study attempts to value the externalities generated by coal power plants in Western Visayas and determine the efficiency implications of valuing these externalities. Valuing externalities can help determine the appropriate environmental policy, such as the amount of tax that will correct for the inefficiency. Benefit Transfer Method (BTM) specifically unit value transfer, was used to estimate the values of pollution damages. To estimate the externalities of coal power in Western Visayas, this study first looked at the emissions caused by three major advanced coal power technologies: Pulverized Fuel (PF), Circulating Fluidized Bed (CFB) and Integrated Gasification Combined Cycle (IGCC). The two existing coal power plants in Western Visayas utilize CFB technology, which has a higher fuel flexibility and require a lower capital cost. After which, several studies that estimate the values of greenhouse gas (GHG) externalities were examined. These values were then applied to the emissions of the two coal power plants in the region. Results show that total externalities range from PhP 0.08/kWh to PhP 0.44/kWh. This can increase the current effective electricity rate by 0.65 to 4.1 percent.

Keywords:Coal energy, externalities, valuation, clean coal technology, corrective tax,
power plants