Profitable to cut air pollution

Health benefits alone will save €38–139 billion per year if a new NEC directive is implemented. Photo: © M. Schuppich - Fotolia.com

The monetised health benefits alone of less air pollution are up to 42 times greater than the emission abatement costs. In addition there will be substantial benefits to ecosystems, forests, agricultural crops and materials.

In December last year, the European Commission presented its Clean Air Package, including a proposal to revise the directive on National Emissions Ceilings (NEC), by setting new country-by-country emission reduction requirements up to 2030 for six main pollutants.

While the suggested level of ambition did not impress environmental groups, it would still result in cutting EU-wide emissions of sulphur dioxide (SO2) by 81 per cent; nitrogen oxides (NOx) by 69 per cent; non-methane volatile organic compounds (NMVOCs) by 50 per cent; ammonia (NH3) by 27 per cent; particulate matter (PM2.5) by 51 per cent; and methane (CH4) by 33 per cent by 2030, compared to the emission levels in the base year 2005. (See Acid News 1/2014.)

By 2030, and compared to the baseline (business as usual), the additional emission reductions are estimated to annually avoid more than 58,000 air-pollution-related premature deaths, 20,000 respiratory hospital admissions, 44,000 cases of chronic bronchitis, and 61 million restricted activity days. In addition, they would save 123,000 km2 of ecosystems from eutrophication by excess nitrogen pollution, of which 56,000 km2 are protected Natura 2000 areas, and save 19,000 km2 of forest ecosystems from acidification.

A cost-benefit analysis1 (CBA) has been made to compare the estimated cost for additional emission abatement measures beyond the baseline with the estimated health benefits.
It shows that the health benefits alone will by 2030 save society €38–139 billion per year in external damage costs and provide about €3 billion per year in direct benefits due to higher productivity of the workforce, lower healthcare costs, higher crop yields and less damage to modern buildings.

It should be noted that for various reasons some of the health benefits from less air pollution exposure were not included in the valuation. This applies, for example, to decreased chronic effects of ozone on mortality and reduced damage to health from nitrogen dioxide (NO2) exposure.

Moreover, the presentation of the results of the cost-benefit analysis has been limited geographically to the EU’s 28 member countries, which means that no allowance has been made for the positive effects of reducing emissions in the EU on health and the environment in non-EU countries, such as Norway, Switzerland, Russia, Ukraine, Belarus, Serbia, Albania, Bosnia-Herzegovina, Macedonia, Moldova, Montenegro and Turkey. The reduced damage to human health in countries outside the EU was estimated at between €2.3 and 8 billion/year.

The additional cost of pollution abatement resulting from the proposed actions has been estimated to reach €3.3 billion per year in 2030, which represents about 0.02 per cent of the gross domestic product of EU countries in that year. Spread across the EU population, it is equivalent to an annual cost per person of about seven euro (or a daily cost of two euro cents).

This cost estimate appears however to be exaggerated. For example, it is based on the assumption that purely technical pollution control measures will be employed, thus ignoring other, often cheaper, methods of reducing emissions, including various structural measures such as fuel switching, efficiency improvements and the expected increase in use of renewable energy sources. Moreover, it is assumed that these technical emission reduction measures when applied in 2030 will have the same efficiency and costs as current technology.

According to the Commission’s own analysis, an alternative energy scenario that would result in a reduction of greenhouse gas emissions in the EU by 40 per cent between 1990 and 2030, could cut the cost of achieving the proposed new air pollution reduction commitments for 2030 by more than a third, from €3.3 to €2.1 billion/year. The same scenario could also reduce costs in 2030 for implementing already approved air pollution control policy by about €5 billion/year.

One overall conclusion is therefore that the expected costs given in the Commission’s cost-benefit analysis are very probably exaggerated, while the estimated benefits are clearly underestimated.

Despite this, the Commission’s analysis shows that the health benefits alone that would arise from the proposed measures in the EU’s 28 member countries exceed the costs by a factor of at least 12 (lowest valuation) and as much as 42 (highest valuation). In addition, there will be substantial environmental benefits from reduced ecosystem damage, but these are difficult or in many cases impossible to monetise.

This shows that a higher level of ambition is socioeconomically motivated, a conclusion that is further reinforced if clean air policy is seen in combination with a tougher climate policy.

Christer Ågren

1Cost-benefit Analysis of Final Policy Scenarios for the EU Clean Air Package (Version2, March 2014). Report to the European Commission by Mike Holland, EMRC.
 

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