1.3 Ensure public budgets integrate positive and negative energy externalities
Empowering local players
The problem at hand
All investment decisions have an impact on material and energy resources as well as on discharges, emissions and other types of waste. The impact in terms of security, health, air quality and predation of resources will differ depending on the source of energy considered. Some decisions will boost employment, whilst others will reduce manpower needs.
We call “externalities” the cost of the consequences of these micro-economic decisions paid for by society. The externality is said to be positive when the decision avoids societal costs on the natural, social and economic environment. It is negative when it involves additional societal costs for repairing damage to the ecosystem or in terms of lost jobs.
The “polluter-payer” principle means “internalising externalities”, that is, making the person responsible for the damage pay for it, via an energy tax or through a waste management or water treatment system. But many areas remain unaccounted for. We therefore do not hold all the cards for making the right decisions.
Present public budgets that integrate positive and negative externalities.
Ideally, this calculation should apply to all budget items. But calculation bases accepted by all stakeholders in a given country are rare. Lighter systems could be used in a more realistic way, on a one-project basis, by applying an externality cost to the energy prices or to CO2 emissions.
Conditions for success
Cities and towns that show the way
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Energy Cities, Local authorities in energy transition.