The analysis on which figure 12 is based is acknowledged to be incomplete and much attention is being given to just how to estimate such external costs. However, the data show that, when externalities are accounted for, the advantage of fossil fuels is much reduced vis a vis renewable sources, except in the case of natural gas. Implementation of Full-Cost Accounting A separate, and even knottier problem, is how to implement a lull-cost accounting so that external and environmental effects will be recognized properly. It is encouraging that the need for such an accounting is well recognized. The 15th World Energy Congress [10] addressed this concern as follows: “The full and proper pricing of energy is required for economic as well as environmental reasons. It encourages efficiency and the driving out of more polluting by less polluting forms of energy and energy use. It is a key factor in the support of sustainable development. It will promote desirable as well as economically viable investment. However, it would be politically and socially unrealistic to believe that such pricing can be introduced overnight.” Some principles have been proposed. For example, the "polluter pays". This is all very well as a political slogan, but the fact is that remediation of pollution increases the cost of energy to the consumer, so eventually we all pay. The challenge is to find some fair way of accounting for such external costs, levying tariffs or other charges to offset these costs and, importantly, making sure that the revenue is used for the intended remediation. The process must also insure that the proper signals are sent to consumers and producers alike that human and environmental impacts must either be avoided or remediation paid for and that such efforts bear real costs. A sound principle is that efficiency should be rewarded. Much effort in the Industrialized Countries is going into programs that encourage efficiency. These programs, generally termed Demand Side Management, involve utility companies helping their users to install more efficient equipment. This rewards the user with lower energy costs and the Figure 12. Power Costs With External Effects Considered
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