Abstract
In this paper we investigate external costs of electricity and heat generation and the level of internalisation of these costs using environmental levies and subsidies in a selection of new EU member states (Bulgaria, Czech Republic, Estonia, Hungary, Poland, and Slovakia). The results calculated for a number of power plants and combined heat and power generators based on fossil fuels show a huge range of estimates differing nearly by two orders of magnitude and in some cases even surpassing electricity generation costs.
Having compared external costs per unit of energy produced with rates of environmental taxes and charges we find that the level of internalisation is fairly low for existing fossil-fuelled power plants in all considered countries. The picture is somehow different for renewable energy sources, still the range of external costs is rather big.