External Costs and External Price Addings in the Swiss Energy Sector

Abstract

This was the idea which led to a research project (Ott, Masuhr, 1994) aiming at determining the external costs of energy use in Switzerland. Initiated by the Federal Office for Economic Policy (FOEP) it was cofinanced by the Federal Office of Energy and the Office for Federal Building. The project emerged from a FOEP-pro-gram which intends to accelerate know-how transfer in the energy sector to support energy saving measures and the use of renewable energy. It was expected that lower external costs can be used as promoting arguments for energy savings and renewable energy use. Federal support was not unanimous at first. Official energy and environmental policies rather tend towards a standard-price approach with energy-and CO₂-taxes, where necessary tax rates are determined by political acceptance and by the chosen standard not by external costs in a Pigouvian sense. But it was then acknowledged that political acceptance for standards and for taxes needs information about avoided external costs too.