Air quality targets much cheaper than expected

A win win for climate and air. Photo: © giromin - Fotolia.com

The EU’s new climate and energy policy for 2030 opens the way for more ambitious clean air targets. The air pollution limits for 2030 proposed by the Commission last December could be achieved at €5.5bn less cost per year when the climate and energy package for 2030 is factored in.

A new study estimates that meeting the air pollution targets proposed last December, will be €2.2bn cheaper than business as usual, whereas the European Commission predicted it would be €3.3bn more expensive. All in all, implementing the climate and energy package will therefore cut the annual costs of meeting the proposed national emission reduction commitments (ERCs) for a number of air pollutants by €5.5bn in 2030.

Moreover, after analysing the economically optimal ambition level, the researchers conclude that the Commission’s proposed “gap closure” – the improvement in health impacts that the legislation could bring about on a scale ranging from business as usual to the maximum technical feasible emissions reduction – should be raised by a further 7 percentage points, from 67 per cent to 75 per cent.

The study was undertaken at the request of the European Parliament’s Environment Committee, to provide a complementary impact assessment, exploring the interactions between the EU’s air quality policy and its climate and energy policy.

In December 2013, the Commission proposed a revision of the National Emission Ceilings (NEC) Directive that should reduce premature mortality from PM_2.5 by 52 per cent in 2030 compared to 2005, and yield an additional 2.22 million life years to the EU’s population annually. (See AN 1/2014)

It is well known that climate and energy policy measures also reduce emissions of air pollutants, with immediate benefits for human health and ecosystems. At the same time, improved energy efficiency and the replacing of fossil fuels by renewable sources of energy lower fuel consumption, which in turn will decrease the need and costs for installing and operating technical air pollution control systems.

The main reason for this new impact assessment is that, due to the different timings of the two policy proposals, these interactions and the potential savings in air pollution control costs under a more stringent climate and energy policy were not fully taken into account when the Commission set the targets for the Clean Air Policy package.

So the new study compares the costs for achieving proposed air quality improvements in a scenario that closely resembles the EU’s new climate and energy targets – i.e. by reducing greenhouse gas (GHG) emissions by 40 per cent, achieving a 27 per cent share in renewable energy, and a 30 per cent improvement in energy efficiency by 2030 – against those presented in the Commission’s air quality impact assessment that did not consider these new climate and energy targets. The comparison uses the same model tool, databases and assumptions as were used for the Clean Air Package.

The results show that, as a co-benefit of the climate and energy policy, the changes in energy consumption would lead to lower air pollutant emissions, with the exception of ammonia emissions, which emanate primarily from agriculture. In 2030, and in the absence of any additional air pollution controls beyond what is already laid down in current legislation, PM_2.5 emissions would be 10 per cent lower than in the reference scenario, NOx emissions 8 per cent, SO2 emissions 6 per cent, and VOC emissions 4 per cent lower (see Table).

Table: EU air pollutant emissions (kilotons) and health impacts (million years of life lost) in 2005 and projections for 2020, 2025 and 2030 under various scenarios.

CLE = Current legislation; Assumes implementation of existing legislation.
REF = Reference; Based on the “old” energy scenario used for the Commission’s Clean Air Package proposal.
CEP = Climate and energy policy; Based on the “new” climate and energy policy scenario up to 2030, i.e. a 40% reduction in GHGs, a share of 27% renewables, and a 30% improvement in energy efficiency.
ERC = Emission Reduction Commitment; as proposed in the Commission’s Clean Air Package proposal.
75%-CEP = A 75-per-cent gap-closure target for reducing PM health damage using the “new” climate and energy policy scenario.
MTFR = Maximum technically feasible reductions; Assumes a gradual introduction of currently available emission control technologies to new emission sources.

These emission cuts would reduce population exposure to PM_2.5 by 5.5 per cent and gain 138,000 life years annually, extending life expectancy of EU citizens by 11.5 million life years in total. Less combustion of fossil fuels will also reduce the need for air pollution control equipment, thereby cutting overall emissions control costs by €3.6 bn/yr, compared to the reference scenario.

Also the incremental cost for achieving the Commission’s proposed national emission ceilings for 2030 will come down as the remaining need for additional emission reductions shrink. In effect, the cost for additional measures would come down from €3.3 to €1.4 bn/yr. Because costs for implementing already existing pollution control legislation are also lower, the total costs for attaining the proposed NECs would decline from €93.5 to €88.0 bn/yr, i.e. by €5.5 bn/yr.

Altogether, the cost for achieving the proposed NECs by 2030 would actually be €2.2 bn/yr below the cost for the current legislation case under the “old” energy scenario, which was used as the benchmark for the cost analysis in the Commission’s air quality impact assessment.

Following the approach for target setting used by the Commission, the study also analysed what new level of ambition would be seen as “ecomically rational” under the new energy policy scenario. According to this approach, this would occur at the point where marginal health benefits of further emission reductions equal marginal costs.

Using the most conservative economic valuation of premature mortality, a target of a 75 per cent “gap closure” emerged as the economically optimal rational ambition level. (Using higher values of economic valuation resulted in up to a 92 per cent gap closure being economically optimal.)

A 75 per cent gap closure in 2030 would reduce premature mortality from PM_2.5 by 55 per cent compared to 2005, saving an additional 140,000 life years annually, compared to the proposed national emission ceilings.

On top of current legislation (€86.6 bn/yr), the cost for additional measures would amount to €4.7 bn/yr, i.e. a total of €91.3 bn/yr. This is €2.2 bn/yr lower than the total cost of €93.5 bn/yr for the original proposal, composed of €90.2 bn/yr for current legislation and €3.3 bn/yr for additional measures. So when compared to the “old” current legislation costs, the additional cost for achieving the 75 per cent gap closure under the new energy scenario is €1.1 bn/yr, which is two-thirds lower than costs for the original NEC proposal of €3.3 bn/yr.

An economically rational ambition, based on the most conservative valuation of human life, would therefore, according to the study, aim for a 7 per cent more stringent health target compared to the Commission proposal. The additional health benefits range between €8.4 and 50.8 bn/yr, i.e. they are much higher than the additional costs.

Based on the same approach, the study also analysed economically optimal ambition levels for the years 2025 and 2020, and found that in 2025, such an ambition level would save annually 114,000 life years more than the level discussed in the impact assessment of the Clean Air Policy package. At a cost of €1.7 bn/yr (equivalent to 0.012% of EU GDP in that year), the additional measures would yield health benefits of between €6.6 and 39.6 bn/yr.

For 2020, the Commission settled for a very low ambition level in its proposal. The national ERCs for this year are the same as in the revised Gothenburg Protocol of the Convention on Long-range Transboundary Air Pollution, which was negotiated during the deep economic recession three to five years ago. Raising the 2020 ambition level to what is seen as economically optimal would therefore annually save as much as 680,000–870,000 life years, with benefits ranging between €40 and 300 bn/yr. Matching the most conservative estimate of health benefits would increase air pollution control costs by €3.4 bn/yr.

The parliament’s environment committee will debate the proposed revision of the NEC Directive, starting in March next year. British MEP Julie Girling of the European Conservatives and Reformists (ECR) group has been appointed as the Parliament’s rapporteur.

Christer Ågren

The study: Complementary Impact Assessment on interactions between EU air quality policy and climate and energy policy (October 2014). By the International Institute for Applied Systems Analysis (IIASA).