Paris, 11 March 2002

The role of external costs in energy policy

A new report by the NEA and the International Energy Agency

The NEA and the International Energy Agency (IEA) announce the publication of the proceedings of an international workshop "Externalities and Energy Policy: The Life Cycle Analysis Approach", jointly organised by the two agencies in Paris on 15-16 November 2001.

Incorporating external costs ("externalities") into energy prices is important to sustainable energy policy. This represents a key challenge and an important step towards "getting the prices right". Life cycle analysis (and assessment) (LCA) is a process that seeks to identify and assess the environmental, economic and social impacts associated with a product, process or activity, and it provides a conceptual framework for a detailed and comprehensive, comparative evaluation of energy supply options.

The results of the expert analyses made available during the workshop suggest that when monetised, energy externalities can form a significant part of the total economic cost of certain sources of power generation or transportation fuels. While large uncertainties remain, and may prevent their direct application in policy making, the LCA results may at least provide a qualitative guide to policy makers on the relative environmental impacts of the different energy technologies and therefore on the implied benefits of greater utilisation of low-impact technologies. They may also serve as a basis for a constructive dialogue with key stakeholders on resource development and use, while recognising that different stakeholders have different interests and responsibilities.

The proceedings of the workshop provide a record of the presentations made, along with a summary of the discussions held among experts, policy makers and members of the industry. These proceedings can be downloaded from the NEA and IEA websites, and are also available in paper format free of charge.

Externalities and Energy Policy: The Life Cycle Analysis Approach
Workshop Proceedings, Paris, France, 15-16 November 2001
ISBN 92-64-18481-3 - 240 pages
Free: paper or web (

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Press contact

Ms. Cynthia Gannon-Picot 
Head, External Relations and Public Affairs
OECD Nuclear Energy Agency (NEA)
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