In many countries, negative associations are often attached to the import of waste. Our research evaluates whether this is the case from an economic point of view, using an estimation of the net social cost of producing district heating in Sweden. The study finds that using imported waste is economically advantageous compared to biofuel, primarily due to lower fuel costs and environmental impacts of greenhouse gas emissions.
The motivation of our research is to address the growing need for sustainable waste management and energy production solutions. It aims to assess the economic and environmental viability of using imported waste for district heating in Sweden, a practice that could offer a sustainable alternative to traditional fuels and contribute to the circular economy. However, many objections are present in press, public, and political discussions. A scientific analysis of all relevant costs and benefits can help to add facts to these discussions.
All costs and benefits
The methodology of the article involves a detailed cost-benefit analysis to evaluate the net social cost of using imported waste for district heating in Sweden. This analysis includes private costs, environmental externalities, and fuel transport costs. We compare different scenarios, including various fuel types and sources, to determine the economic and environmental impacts. Consequently, we quantitatively assessed the costs associated with each aspect, such as the cost of acquiring fuel, the environmental cost of emissions, and the cost of transportation. The methodology is comprehensive, incorporating a wide range of factors to provide a holistic view of the cost and benefit implications of using imported waste for energy production.
We utilised a range of data to support the analysis. This includes detailed information on fuel prices, transport costs, and environmental externality costs associated with different fuel types, specifically focusing on imported waste and biofuel. We also incorporate data on greenhouse gas emissions from various stages of the waste management and energy production processes. Moreover, our study draws on existing literature, statistical data, and empirical studies to provide a comprehensive view of the economic and environmental factors involved in using imported waste for district heating in Sweden. This diverse data set allows for a thorough comparison of the net social costs of different energy production methods.
‘Using waste to create energy is often more efficient and cleaner than some traditional fuel sources’
Is import favourable?
Our main findings are that producing district heating in Sweden using imported waste is economically beneficial compared to using biofuel. The study reveals significant advantages in terms of lower fuel costs and environmental impacts, particularly regarding greenhouse gas emissions. Despite the higher external costs associated with waste incineration, especially from distant sources, the overall societal benefit remains favourable. This highlights the potential of using imported waste as a sustainable and economically viable energy source in a circular economy.
The reduction of environmental impacts in the context of using imported waste is attributed to several factors. Primarily, this approach diverts waste from landfills, reducing landfill emissions. This is quite important as much waste is still landfilled in the European Union and not all waste is suitable for recycling. Additionally, using waste to create energy is often more efficient and cleaner than some traditional fuel sources, leading to lower overall greenhouse gas emissions. This method effectively utilises waste as a resource, contributing to a circular economy, which is inherently more sustainable. These factors collectively contribute to a net reduction in environmental impacts compared to traditional energy production methods.
Beneficial for all countries?
Our conclusion, specifically regarding the use of imported waste for district heating in Sweden, may not be universally applicable to other countries. This is because the economic and environmental benefits are highly context-specific, depending on factors like local waste management practices, energy infrastructure, environmental regulations, and the availability and cost of alternative fuels. Each country has unique circumstances that could significantly influence the feasibility and benefits of such a practice. Therefore, while the findings provide valuable insights, they need to be assessed and potentially adapted to suit the specific conditions of other regions or countries. For colder countries, the conclusion could be more relevant due to their higher demand for heating. These countries might benefit more from efficient and sustainable heating solutions like waste-to-energy systems.
Bio:
Elbert Dijkgraaf is Professor of Empirical Economics of the Public Sector at Erasmus School of Economics. Additionally, he is the coordinator of the Master’s programme Economics of Sustainability. His research is mainly organised around sustainable development, environmental policy, and public sector economics.
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This item is part of Backbone Magazine 2024. The magazine can be found in E-building or Theil-building for free. Additionally, a digital copy is available here. Backbone is the corporate magazine of Erasmus School of Economics. Since 2014, it is published once a year. The magazine highlights successful and interesting alumni, covers the latest economic trends and research, and reports on news, events, student and alumni accomplishments.
