24 Apr 2009

National and EU-Level Estimates of Energy Supply Externalities

Steve Arnold / Alistair Hunt

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Energy security is a topic that is of increasing importance to policy-makers and yet is a relatively under-researched area. Although macroeconomists have noted that there may be external costs associated with energy security measures, there is no definitive methodology for calculating or assessing these externalities. This paper presents an overview of the theoretical externalities and develops estimates for the size of the external costs of energy arising from energy insecurity. In particular, the research centres on the costs of electricity production and oil.