Indicator: Environmental costs of energy and road transport | Umweltbundesamt

At a glance

• Power generation, heat generation and transport activities pollute the environment, among other things, through the emission of greenhouse gases and air pollutants.
• This results in high subsequent costs for society, for example through environmentally-induced diseases, damage to ecosystems or even buildings.
• For Germany, these environmental costs are estimated to amount to almost 301 billion euros in 2022, a decrease of 3.3 % compared to 2021.

Environmental importance

The use and transformation of energy resources for electricity and heat generation and road transport pollutes environment through the emission of greenhouse gases and air pollutants, e.g. particulate matter and nitrogen oxides. These cause an increase in morbidity, damage to buildings and monuments (facade pollution) and are a burden on ecosystems (cf. 'Population exposure to particulate matter pollution' and ‘Agricultural nitrogen surplus’). The emitted greenhouse gases contribute to climate change. The consequences of climate change, such as an increase in heavy rainfall, thunderstorms or floods, threaten human lives and cause major damage.

This is also associated with economic costs amounting to billions, such as expenses for the restoration of storm damage. Even fifteen years after the publication of the "Stern Review," economist Nicholas Stern reiterates that the costs of inaction exceed the costs of climate protection many times over and again calls for decisive action in the fight against climate change (Stern 2006 and Stern 2021).

Assessing the development

After environmental costs from energy and road transport rose by 6% from 2020 to 2021, they fell by 3.3% between 2021 and 2022 and amounted to €301.1 billion in 2022. This development is the result of a decline of 6.2% in electricity generation and 6.9% in heat generation. This downward trend in heat and electricity generation contrasts with an increase of 3.3% in the environmental costs of road transport. On balance, this results in a decrease of 3.3 % in total environmental costs from energy and road transport.

The main reason for the lower environmental costs is the low final energy consumption: final energy consumption in 2022 was the second lowest since 1990, and was only lower in 2020, the year of the pandemic.

Methodology

The calculations are based on the work on “Methodological Convention 3.1 - Cost Rates” and “Methodological Convention 3.2 for the Assessment of Environmental Costs”. The latter represents a partial update of “Methodological Convention 3.1 - Cost Rates”, in the course of which the chapters on greenhouse gas emissions and air pollutants relevant to this indicator were revised.

The estimates of the environmental costs of greenhouse gas emissions are based on a new model, the Greenhouse Gas Impact Value Estimator (GIVE) model. This is a further development of the predecessor model Climate Framework for Uncertainty, Negotiation and Distribution (FUND). The GIVE model is an integrated assessment model that can be used to determine cost rates for the greenhouse gases methane and nitrous oxide in addition to cost rates for carbon dioxide emissions. The new methodology will be used for estimates from 2020 onwards. For comparison purposes, the environmental costs based on the FUND are also shown with the dashed line for the years 2020 to 2022. As can be seen, the climate-related environmental costs determined using the GIVE model are slightly higher than in the FUND model.

More detailed information: 'Gesellschaftliche Kosten von Umweltbelastungen' (in German only).