Environmental costs estimation and mathematical model of marginal social cost: A case study of coal power plants
-
Author(s)Toyese OyewoLink to ORCID Index: https://orcid.org/0000-0002-5388-7317
,
Odunayo Magret OlarewajuLink to ORCID Index: https://orcid.org/0000-0002-4366-040X
,
Melanie Bernice CloeteLink to ORCID Index: https://orcid.org/0000-0002-8956-7606
,
Olukorede Tijani AdenugaLink to ORCID Index: https://orcid.org/0000-0002-5844-1621
-
DOIhttp://dx.doi.org/10.21511/ee.12(1).2021.08
-
Article InfoVolume 12 2021, Issue #1, pp. 90-102
- Cited by
- 560 Views
-
148 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
An increase in electricity production is proportional to environmental risks due to continuous energy production. The paper aims to quantitatively estimate the environmental costs and mathematically model the marginal social cost associated with the lifespan of the coal power plants. Results revealed South Africa Tier 1 company optimum level of electricity production per annum at around 2.15 gigawatts, considering the emission costs and reasonable profit. 85% of the total emissions during the combustion phase average cost of the C02 emission discharged by coal is calculated as 0.23c/KWh, 0.085c/kWh is calculated for NO2, while SO2 is 0.035c/KWh. Total emission cost represents 69.2% of the total cost of producing 1 MGW of electricity. The results confirmed the company losses to be insignificantly considerable to the evaluated environmental costs and capital investment. However, the use of this newly developed mathematical model depends on the source of energy production to confirm the feasibility and profitability of investment in coal-powered stations using environmental management accounting and marginal social cost approaches.
Acknowledgment
The authors would like to acknowledge the National Research Foundation and Durban University of Technology for financial support.
- Keywords
-
JEL Classification (Paper profile tab)Q56
-
References47
-
Tables1
-
Figures7
-
- Figure 1. Electricity generation quantity and cost of production
- Figure 2. Environmental impact of electricity production
- Figure 3. Scatter plot of cost of electricity vs Total electricity produced (sold)
- Figure 4. Regression analysis of the TSB of electricity vs Electricity sold
- Figure 5. CO2 emission in Mt Vs Electricity sold in GWh (2020)
- Figure 6. NO2 emission in Kt Vs Electricity sold in GWh (2020)
- Figure 7. SO2 emission in Kt Vs Electricity sold in GWh
-
- Table 1. Total costs and total revenue of electricity produced for the past 20 years
-
- Abella, J. A., & Bayacag, P. (2013). Environment, health, and economic growth in the Philippines. 2013 Biennial Convention of the Philippines Agricultural Economics and Developmental Association.
- Adenuga, O. T., Mpofu, K., & Kgaugelo, M. (2020). An approach for enhancing optimal resource recovery from different classes of waste in South Africa: Selection of appropriate waste to energy technology. Sustainable Futures, 2, 100033.
- Alikhani, R., & Jori M.M. (2014). Application of social and environmental information disclosure theories. Accounting and Auditing Studies, 3, 9, 2014, 36-53.
- Awodumi, O. B., & Adewuyi, A. O. (2020). The role of non-renewable energy consumption in economic growth and carbon emission: Evidence from oil producing economies in Africa. Energy Strategy Reviews, 27, 100434.
- Cooremans, C. (2012). Investment in energy efficiency: do the characteristics of investments matter? Energy Efficiency, 5, 497-518.
- Chakamera, C., & Alagidede, P. (2018). Electricity crisis and the effect of CO2 emissions on infrastructure-growth nexus in Sub Saharan Africa. Renewable and Sustainable Energy Reviews, 94, 945-958.
- De Marco, A., Proietti, C., Anav, A., Ciancarella, L., D’Elia, I., Fares, S., Fornasier, M. F., Fusaro, L., Gualtieri, M., Manes, F., Marchetto, A., Mircea, M., Paoletti, E., Piersanti, A., Rogora, M., Salvati, L., Salvatori, E., Screpanti, A., Vialetto, G., Vitale, M., & Leonardi, C. (2019). Impacts of air pollution on human and ecosystem health, and implications for the National Emission Ceilings Directive: Insights from Italy. Environment International, 125, 320-333.
- Donnelly, L. (2019, February 15). Medupi and Kusile: Costly and faulty. The Mail & Guardian.
- Dwivedi, D. N. (2015). Managerial Economics: Production and Cost Analysis (8th ed.). Vikas Publishing House.
- Eberhard, A., Gratwick, K., Morella, E., & Antmann, P. (2016). Independent power projects in Sub-Saharan Africa: Lessons from five key countries. Washington, D.C.: World Bank Group.
- Emmanuel, C., Harris, E., & Komakech, S. (2010). Towards a better understanding of capital investment decisions. Journal of Accounting & Organizational Change, 6(4), 477-504.
- ESKOM. (2020). The Eskom Factor 2.0 (Report).
- Fakoya, M. B. (2013). Economic growth, sustainability and sustainable development: challenges facing the BRICS economic nation of South Africa. Environmental Economics, 4(3).
- Gupta, G. V. M., Sudheesh, V., Sudharma, K. V., Saravanane, N., Dhanya, V., Dhanya, K. R., Lakshmi, G., Sudhakar, M., & Naqvi, S. W. A. (2016). Evolution to decay of upwelling and associated biogeochemistry over the southeastern Arabian Sea shelf. J. Geophys. Res. Biogeosci. 121, 159-175.
- Hagens, N. J. (2020). Economics for the future – Beyond the superorganism. Ecological Economics, 169, 106520.
- Hamidu, A., Haron, M., & Amran, A. (2015). Corporate Social Responsibility: A Review on Definitions, Core Characteristics and Theoretical Perspectives. Mediterranean Journal of Social Sciences, 6(4), 83-95.
- Huaman, R. E., & Jun, X. T. (2014). Energy related CO2 emissions and the progress on CCS projects: A review. Renewable and Sustainable Energy Reviews, 31, 368-385.
- IPCC. (2019). 2019 Refinement to the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.
- Katircioglu, S.T., Feridun, M. Kilinc, C. (2014). Estimating tourism-induced energy consumption and CO2 emissions: The case of Cyprus. Renewable and Sustainable Energy Reviews, 29, 634-640.
- Kessides, I. N. (2014). Powering Africa’s sustainable development: The potential role of nuclear energy. Energy Policy, 74(suppl 1), S57-S70.
- Lipsey, R. G. (2018). A Reconsideration of the Theory of Non-Linear Scale Effects. Cambridge: Cambridge University Press.
- Lipton, D. (2013). South Africa: Facing the Challenges of the Global Economy (IMF Report).
- Mellichamp, D. A. 2019. Profitability, risk, and investment in conceptual plant design: Optimizing key financial parameters rigorously using NPV%. Computers & Chemical Engineering, 128, 450-467.
- Mohammed, Y. S., Mustafa, M. W. and Bashir, N. (2013). Status of renewable energy consumption and developmental challenges in Sub-Sahara Africa. Renewable and Sustainable Energy Reviews, 27, 453-463.
- Mukhalalati, B., & Awaisu, A. (2019). Principles, Paradigms, and Application of Qualitative Research in Pharmacy Practice. In Z.-U.-D. Babar (Ed.), Encyclopedia of Pharmacy Practice and Clinical Pharmacy (pp. 162-172). Oxford: Elsevier.
- Munawer, M. E. (2018). Human health and environmental impacts of coal combustion and post-combustion wastes. Journal of Sustainable Mining, 17(2), 87-96.
- Nazari, S., Shahhoseini, O., Sohrabi-Kashani, A., Davari, S., Paydar, R., & Delavar-Moghadam, Z. (2010). Experimental determination and analysis of CO2, SO2 and NOx emission factors in Iran’s thermal power plants. Energy, 35(7), 2992-2998.
- Nkambule, N. P., & Blignaut, J. N. (2017). Externality costs of the coal-fuel cycle: The case of Kusile Power Station. South African Journal of Science, 113(9), 1-9.
- Nkomo, J. (2005). Energy and economic development: challenges for South Africa. Journal of Energy in Southern Africa, 16(3), 10-20.
- Nooij, de M. (2011). Social cost-benefit analysis of electricity interconnector investment: A critical appraisal. Energy Policy, 39(6), 3096-3105.
- Oke, A. E., Aigbavboa, C. O., & Dlamini, S. A. (2017). Carbon Emission Trading in South African Construction Industry. Energy Procedia, 142, 2371-2376.
- Okolo, G. N., Everson, R. C., Neomagus, H. W. J. P., Sakurovs, R., Grigore, M., & Bunt, J. R. (2019). The carbon dioxide, methane and nitrogen high-pressure sorption properties of South African bituminous coals. International Journal of Coal Geology, 209, 40-53.
- Owusu, P. A., & Asumadu-Sarkodie, S. (2016). A review of renewable energy sources, sustainability issues and climate change mitigation. Cogent Engineering, 3(1), 1167990.
- Oyewo, A. S., Aghahosseini, A., Ram, M., Lohrmann, A., & Breyer, C. (2019). Pathway towards achieving 100% renewable electricity by 2050 for South Africa. Solar Energy, 191, 549-565.
- Ozili, P. K. (2020). Theories of Financial Inclusion. SSRN Electronic Journal.
- Parker, K. (1993). Economics, Sustainable Growth, and Community. Environmental Values, 2(3), 233-245.
- Riekert, J. W., & Koch, S. F. (2012). Projecting the external health costs of a coal-fired power plant: The case of Kusile. Journal of Energy in Southern Africa, 23(4).
- Santos, G., Behrendt, H., Maconi, L., Shirvani, T., & Teytelboym, A. (2010). Part I: Externalities and economic policies in road transport. Research in Transportation Economics, 28(1), 2-45.
- SHIFT. (2017). About Us.
- Statistics South Africa. (2017). Environmental Economic Accounts Compendium (Report No. 04-05-20). Pretoria: Statistics South Africa.
- Stevenson, S.L. (2012). Significant changes to ENSO strength and impacts in the twenty-first century: Results from CMIP5. Geophysical Research Letters, 39, 17.
- Sulemana, I., James, H. S., & Rikoon, S. (2017). Environmental Kuznets curves for air pollution in African and developed countries: Exploring turning point incomes and the role of democracy. Journal of Environmental Economics and Policy, 6(2), 134-152.
- Trianni, A., Cagno, E., Marchesani, F., & Spallina, G. (2017). Classification of drivers for industrial energy efficiency and their effect on the barriers affecting the investment decision-making process. Energy Efficiency, 10(1), 199-215.
- Yang, Z., Ji, P., Li, Q., Jiang, Y., Zheng, C., Wang, Y., Gao, X., & Lin, R. (2019). Comprehensive understanding of SO3 effects on synergies among air pollution control devices in ultra-low emission power plants burning high-sulfur coal. Journal of Cleaner Production, 239, 118096.
- Yun, Y., Gao, R., Yue, H., Li, G., Zhu, N., & Sang, N. (2015). Synergistic effects of particulate matter (PM10) and SO2 on human non-small cell lung cancer A549 via ROS-mediated NF-κB activation. Journal of Environmental Sciences, 31, 146-153.
- Zhang, Z., Xi, L., Bin, S., Yuhuan, Z., Song, W., Ya, L., Hao, L., Yongfeng, Z., Ashfaq, A., & Guang, S. (2019). Energy, CO2 emissions, and value added flows embodied in the international trade of the BRICS group: A comprehensive assessment. Renewable and Sustainable Energy Reviews, 116, 109432.
- Zyznarska-Dworczak, B. (2017). Legitimacy Theory in Management Accounting Research. Problemy zarządzania – management issues, 16(1/72), 195-203.
-
Fair market value of bitcoin: halving effect
Artur Meynkhard
doi: http://dx.doi.org/10.21511/imfi.16(4).2019.07
Investment Management and Financial Innovations Volume 16, 2019 Issue #4 pp. 72-85 Views: 3971 Downloads: 1051 TO CITE АНОТАЦІЯThe purpose of this article is to analyze the effect that halving has on the fair market value of bitcoins. The main hypothesis of the study is that the decline in the cost of miners’ remuneration for mining is a significant factor that affects the price of cryptocurrencies. The article examines the factors that regulate the issuing process. The significance of a limited supply of bitcoin is detailed in the article, as well as the mechanism for the implementation of the issue of new bitcoins. The study compares the historical inflation data of the US dollar and the projected data on the inflation of bitcoin. The article analyzes the main technical element of cryptocurrency – halving – when the miner’s reward is halved. This analysis includes the mathematical methods of statistical data processing. Research results show that reducing remuneration by half every four years leads to an increased market value of the cryptocurrency. This relationship is clearly illustrated by the Kendall rank correlation method. The results of the study can have a significant impact on the fundamental assessment of bitcoin and can also enable investors to assess any of the existing and operating cryptocurrencies according to this method.
-
The growth strategies of a global pharmaceutical company: a case study of Aspen Pharmacare Holdings Limited
Problems and Perspectives in Management Volume 15, 2017 Issue #1 (cont.) pp. 248-259 Views: 2921 Downloads: 3158 TO CITE АНОТАЦІЯGiven the rapid and sustained growth of Aspen over the past decade, the main aim of this study is to identify and analyze the growth strategies, adopted by Aspen over the period from 2004 to 2014. The research method used was a descriptive study through a single case study of Aspen by analyzing secondary data in the form of publicly available company reports and presentations, as well as financial results, issued between 2004 and 2014. The study finds that, guided by strategic and visionary leadership, Aspen adopted a number of growth strategies including (i) organic growth, as a key factor in creating incremental value for Aspen and its stakeholders, (ii) inorganic growth, in the form of carefully planned and well executed acquisitions, aligned to the Group strategy, (iii) extending territorial coverage through global expansion, particularly into emerging pharmaceutical countries, and (iv) ongoing investment in production capabilities as a means of achieving a strategic advantage. Despite the challenges of intense competition, restrictive legislation, pressure on medicine prices, currency volatility and market specific risks, Aspen has delivered double-digit earnings growth to its shareholders for 16 consecutive years.
-
Executive compensation and firm performance: a non-linear relationship
Rijamampianina Rasoava
doi: http://dx.doi.org/10.21511/ppm.17(2).2019.01
Problems and Perspectives in Management Volume 17, 2019 Issue #2 pp. 1-17 Views: 2879 Downloads: 292 TO CITE АНОТАЦІЯIn order to ensure profitability for shareholders, optimal contracting recommends the alignment between executive compensation and company performance. Large organizations have therefore adopted executives remuneration systems in order to induce positive market reaction and motivate executives. Complex compensation schemes are designed by Boards of Directors using strong pay-performance incentives that explain high levels of executive pay along with company size, demand for management skills and executive influence. However, the literature remains inconclusive on the pay-performance relationship owing to the various empirical methods used by researchers. Additionally, there has been little effort in the literature to compare methodologies on the pay-performance relationship.
Using the dominant agency theory framework, the purpose of this study is to establish and examine the relationship between firm performance and executive pay. In addition, it intends to assess the characteristic of model specifications commonly adopted. To this aim, a quantitative analysis consisting of three complementary methods was performed on panel data from South African listed companies. The results of the main unrestricted first difference model indicate a strong non-linear relationship where the impact of current and previous firm performance on executive pay can be observed over 2 to 4-year period providing support to the optimal contracting theoretical perspective in the South African business context. In addition, CEO pay is more sensitive to firm performance as compared to Director pay. Lastly, although it affects executive pay levels, company size is not found to improve the pay-performance relationship.
