Lecture 4

The fourth lecture was divided into two different parts. The first part was about Environmental Impact Assessment and the second part was about Energy and optimization models. The different parts were lectured by Jukka Paatero and Risto Lahdelma, respectively.

There are many different definitions for Environmental Impact Assessment (EIA). For example Sadler (1996) defines it as follows: “Environmental impact assessment is a process of identifying, predicting, evaluating, and mitigating the biophysical, social, and other relevant effects of proposed projects and physical activities prior to major decisions and commitments being made.”

There are many good reasons to make an EIA. By doing EIA, unsound projects can be withdrawn. Also in viable projects the location of project can be changed to better one based on EIA. However, EIA is not always used in projects, especially in the developing countries. There are even cases where lack of EIA has stopped the project after it has already begun. For example construction of Xiluodu Dam in China, which should be one of the largest hydro power plants in the world when completed, was stopped until the EIA was completed.

Need for EIAs is nowadays much more significant than ever before. Human activities alter the environment more than ever. Also impacts of environmental damage are more significant today because of all the time growing World population. EIA is an important tool to mitigate these environmental impacts.

Lack of EIA and loose environmental regulations may also lead to unfair competition. In several business areas, for example in the manufacturing of solar modules, companies in Western countries have complained that for example Chinese companies get competitive cost advantage because of looser environmental regulations. In the future it is however probable that even developing countries have to tight the regulations to prevent severe environmental damages.

EIA as a part of project planning does not guarantee that the project will be environmentally sustainable. It is always possible that EIA is not made how it should be made or the project is executed even if EIA shows that the project will do some environmental damage and it should not be executed.

The second part of the lecture was about energy and optimization models. National energy models were discussed in this part and what is required for a good national energy model. A key characteristic in good national energy model is its ability to answer to key questions related to the topic. Also integration with planning process, reliability and ease of use are important characteristics for national energy model.

Energy and optimization models –part of the lecture contained lots of theory about models, linear programming etc. At least for me it was sometimes difficult to understand why these topics are discussed as a part of energy economics course and how they should be applied later on the course. Furthermore, some of the topics were easy to understand but some topics were quite difficult to understand without basic knowledge about models, linear programming etc.