Quantifying international energy justice: The cost of electricity within footprint accounts

Abstract

This research quantifies the international electric payments embodied in goods and services, for the purpose of moving towards a clear and fair electric exchange within international footprint accounts. The electric consumption and related cost of 43 countries that represent 84% of global Gross Domestic Product (GDP) has been calculated, shifting from traditionally used Production-Based Accounting (PBA) to Consumption-Based Accounting (CBA). This research has identified not only the electric cost for what is produced in each country, but also the electric cost embodied in imported and exported goods and services. The difference between Production- and Consumption-Based Accounts has been defined as “Hidden Electric Cost” (HEC). Secondly, we have calculated the hypothetical national electric cost if countries were to produce within their own borders all the goods and services they consume. The difference between the current electric footprint cost and hypothetical self-sufficiency cost has been referred to as “Justice in Electricity Costs” (JIEC), an indicator which shows how much a country would have to spend to achieve electric sovereignty. This indicator reveals that there are countries (usually developed ones) that would face greater costs than what they currently pay by outsourcing the production of goods to other less developed countries. The study shows that, from the 43 countries analysed, and the Rest of the World (RoW) considered a 44th one, the ten most developed ones are spending on average 14.36% more on electricity than declared, and the ten least developed ones, 1.35% less than declared. At the same time, the 10 most developed countries would have to spend even 0.86% more to achieve electrical sovereignty, while for the ten least developed countries this would mean savings of 1.04%. In addition, a more specific analysis has been made for the textile and agriculture sectors, showing the ten countries with the highest Human Development Index (HDI) among those analysed would have to spend 438.75% more on average to pay for imported electricity at national price and achieve electric sovereignty for the textile sector, and 24.4% more for the agriculture sector. In the interests of achieving fair global electric payments, it would be appropriate for countries to take these variations in payments into account in international relations so as to move towards greater international justice.