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Indicator: Environmental costs of energy and road transport

A graph shows the development of environmental costs energy generation and road transport between 20120 and 2024. They were 311.4 billion euros in 2020 and 284.7 billion in 2024.
Environmental costs (greenhouse gases and air pollutants) of power and heat generation ...
Source: German Environment Agency
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Table of contents

At a glance

  • Power generation, heat generation and transport activities pollute the environment, among other things, through emission of greenhouse gases and air pollution.
  • This results in high subsequent costs for society, for example due to environmentally-induced diseases, damages to ecosystems and buildings, as well as an increase in the frequency of extreme weather events.
  • For Germany, the monetized environmental damages are estimated to amount to almost 285 billion euros in 2024, a decrease of around 9% compared to 2020.

Environmental importance

The use and conversion of energy resources for electricity and heat generation as well as for road transport place a burden on the environment through the emission of greenhouse gases and air pollutants, e.g. particulate matter and nitrogen oxides. These pollutants lead toincreases in morbidity, damages to buildings and monuments (facade pollution), put pressure on ecosystems (cf. 'Population exposure to particulate matter pollution' and ‘Agricultural nitrogen surplus’) and 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.  

These impacts are also associated with economic costs amounting to billions of euros, for example, 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 far exceed the costs of climate protection and once again calls for decisive action in the fight against climate change (Stern 2006 and Stern 2021).

Assessing the development

Environmental costs from energy and road transport rose by almost 7% from 2020 to 2021, they fell by almost 15% between 2021 and 2024 and amounted to €284.7 billion in 2024. This development is the result of a sharp decline in environmental damages by 36% in electricity generation and 8.4% in heat generation between 2020 and 2024. This downward trend in heat and electricity generation contrasts with an increase of 9.4% in the environmental costs of road transport over the same time period. On balance, this results in a decrease of around 9 % in total environmental costs from energy and road transport.

The decrease in environmental damages between 2020 and 2024, particularly in the electricity generation sector, is driven by a decreasing reliance on fossil energy sources as well as an overall decrease in the amount of electricity generated within Germany.

Methodology

The calculations are based on the work on “The Handbook on Environmental Value Factors – Methodological Convention 4.0” .

The estimates of the environmental costs of greenhouse gas emissions are based on the Greenhouse Gas Impact Value Estimator (GIVE) model, which estimates  the impacts related to the emission of greenhouse gases. The GIVE model is an integrated assessment model that can be used to determine value factors for the greenhouse gases methane and nitrous oxide in addition to value factors for carbon dioxide emissions.

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

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