A framework to estimate biodiversity loss and associated costs due to nitrogen emissions from single power plants

Environmental reporting by companies is becoming increasingly important for measuring sustainability performance, but biodiversity impacts are still largely unaccounted for due to the complexity of assessing such impacts. Energy production by power plants causes nitrogen emissions that may affect nature areas. To assess the impact of power plants on the biodiversity of Natura 2000 areas and to estimate compensation costs, we developed an analytical framework and applied it to four single power plants in the Netherlands. These plants differed according to production capacity and fuel source (natural gas and biomass). The plants affected between 77 and 537 km2 of Natura 2000 nature areas. To estimate cost of biodiversity loss and compensation, three approaches were applied: costs of restoration, ‘insetting’ costs incurred by creating new nature areas within the current Natura 2000 network, and offsetting costs, including land purchase of former agricultural land. Depending on the nitrogen exceedance levels of vegetation, compensation areas ranged between 6.5 and 23.6 ha. The estimated total cost per power plant varied from € 38,430 to € 1,753,261 annually. Depending on the cost method applied, biodiversity cost of energy production by single power plants ranged from 0.06 €.MWh−1 to 1.65 €.MWh−1. This cost largely depends on the type and location of the vegetation affected, which indicates that a spatial analysis is needed to measure the biodiversity footprint of business operations in environmental reporting.