Scandinavian Working Papers in Economics
CERE Working Papers,
CERE - the Center for Environmental and Resource Economics
No 2021:13: Burn it or let them bury it? The net social cost of producing district heating from imported waste
Thomas Broberg (), Elbert Dijkgraaf () and Sef Meens-Eriksson ()
Additional contact information
Thomas Broberg: Trafikverket
Elbert Dijkgraaf: Erasmus School of Economics and Tinbergen Institute
Sef Meens-Eriksson: CERE - the Center for Environmental and Resource Economics
Abstract: In this study, a cost-benefit analysis (CBA) framework is applied to provide insights on policy issues relating to the cross-border trade in waste fuel. We estimate the net social cost of using imported waste fuel in a highly efficient combined heat and power plant (CHP) in a cold climate by considering both private costs and benefits as well as external costs related to energy production, alternative waste management and fuel transport. We conclude that using imported waste fuel under such circumstances is beneficial from a societal perspective given the wide range of assumptions regarding technical, economic and environmental characteristics. The net social cost is mainly determined by fuel cost advantages and the external cost of greenhouse gas emissions. External costs associated with transports only marginally impact the net social cost of waste imports for incineration. The results are robust to variation in the excess heat utilisation rate, which implies that importing waste for incineration would also be beneficial in countries with milder climates where district heating networks already exist.
Keywords: Cost-benefit analysis; district heating; externalities; incineration; trade; waste
39 pages, October 14, 2021
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