Cost-efficiency is a major condition for the acceptability of emission reduction measures in both the areas of air pollution and climate change. It is therefore hardly surprising that the synergies in costs for air and cli- mate policy have been evaluated extensively. The costs of air pollution can be expressed in different ways: in absolute terms, in costs per unit of product or in a percentage of GDP loss. For instance, according to Kojima and Mayorga-Alba (1998), the costs in some of the more industrialized developing countries of local air pol- lution has been estimated at between 0.5% and 2.5% of GDP and is expected to increase sharply. In the Ex- ternE study (Rabl and Dreicer, 2002), the external costs of electricity production were examined on a sys- tematic basis in terms of costs per kWh output. Externalities of coal power production were estimated to be up to 0.09 €/kWh, the main impact categories being public health and climate change. For oil and gas-fired plants, the figures were approximately 0.06 and 0.03 €/kWh, respectively, and for renewable and nuclear energy 0-0.01 €/kWh. These figures were included as ‘benefits’ in a cost-benefit analysis for air pollution or climate change policy integration. The hypothetical nature of these figures, however, (and the fact that costs of one impact may have other causes than electricity production alone) generates large uncertainties in cost- benefit analyses. Therefore the figures given below should not be seen as absolute reductions in costs for environmental policy, but should instead be treated as indicative figures on an aggregate level. Davis et al. (2001) evaluated the value of statistical life (VSL) found in Europe, Canada and the United States to be quite constant at around 3 million US$ (1990 value). For the unit Years of Life Lost, this would mean an approxi- mate 83,000 US$ (1990 value) (Rabl and Spadaro, 2000). Under these assumptions, the figures given in Ta- ble 6.2 translate into costs for particulate matter in the United States alone into about 20 million US$ (1990 value). With regard to climate mitigation measures, Davis et al. (2001) recommend implementing measures aimed at reducing particularly small particulate matter. Reductions in coal combustion, industrial processes and diesel fuel combustion would be effective for both climate policy and the reduction of air quality-related health impacts.
RIVM (2001) performed a cost-benefit analysis of air policy and climate policy, which indicates that the cur- rent costs of air pollution damage far exceed the costs of climate policy (up to 2010). However, the costs of climate change will increase considerably over the course of the 21st century. The Regional Air Pollution Information and Simulation (RAINS) model has now been extended to include greenhouse gases. Ancillary benefits from air policy on climate policy can be estimated, and vice versa. It allows the cost-effectiveness of
a large package of technical measures to be explored, taking into account both air pollution and climate change. Klaassen et al. (2004) and Sliggers (2004) have carried out evaluations like this with the RAINS model. Wieringa (2004) also highlights the economic potential and stresses that the integration of policy will be necessary to prevent shifts of environmental burden from one problem to another.
Though Wieringa (2004), Sliggers (2004) and RIVM (2003) provide interesting material on whether to im- plement policy against air pollution or climate change, the presentation of a case for policy integration that combines the costs of climate policy and air policy on a worldwide level would give specific information on the benefits of policy integration. Alcamo et al. (2002) argue that cost reductions of up to 40-55% in air qual- ity policy can be achieved when integrating climate and NOx/SO2 policy. Van Harmelen et al. (2002) even
conclude that measures for climate policy could reduce costs of SO2 and NOx reduction by 50-70% and 50%,
respectively, up until 2100. Where technological learning only occurs in energy technology and not in NOx
and SO2 abatement technologies (could partly be the case as add-on technology for NOx and SO2 reduction is
already quite mature), it might be cheaper just to implement climate policy, since it can fully outweigh the costs for air policy under these conditions. For the United States, Burtraw et al. (2003) estimate the ancillary benefits in terms of avoiding investments in NOx and SO2 abatement to be 4-7 US$ per tonne of carbon
(US$/tC) reduced, and the health benefits to be 8 US$/tC when a carbon tax of 25 US$/tC is imposed. If the carbon tax is higher (>75 US$/tC), the total benefits are greater but the money spent only on the climate component of the measures remains constant at about 12 US$/tC. This price is comparable to the current in- ternational market price for credits in the Clean Development Mechanism of about 4 US$/tCO2 (about 14
US$/tC).
EEA (2004b) explores the ancillary benefits of the Kyoto Protocol and concludes that the benefits for the European Union in 2010 could be in the order of 12-14% for SO2, 7-8% for NOx, and 4 % for PM10 if the
flexible mechanisms of the Kyoto Protocol are not used. More studies have been carried out in this field (Syri et al., 2001; Chae et al., 2003; Syri et al., 2002; Sliggers, 2004) and they all show drastic net reductions in costs.
Based partly on the above, Swart et al. (2003) and Swart (2004) plead for the integration of air and climate policy in the context of expanding the options of combining climate change and sustainable development targets. They also conclude that there is a lot of potential for synergy between the two areas, but that full pol- icy integration is difficult due to the different natures of the problems. Little research has been carried out into translating the integration potential from the theoretical to the practical level. Fully integrating air qual- ity and climate change policy could lead to maximal synergy, but could also encounter many practical barri- ers because the problems differ in their physical nature (see Section 6.2.1).
6.4.2. Interaction of air quality technical options and greenhouse gas emis-
sions
Air quality → climate change
Table 6.9 gives a qualitative overview of the air pollution abatement options described in 6.2.2, evaluated according to a set of criteria. However, as mentioned in Chapter 1, environmental, political, economic and technical/institutional criteria are used in a way that fits the subject’s needs. Again, we would like to point out that this is a very general assessment, and that outcomes of the evaluation are dependent on local circum- stances and preferences.
Table 6.9 Climate evaluation of technical options for air pollution abatement as discussed in section 6.2.2
Technical option Air quality impact Climate change impact Accep- tability
Cost Ease of implemen- tation
Remarks
Fuel switch transport ++ + 0 +/- + Supply crucial
Engine technology ++ +/0 + + +
Tailpipe controls ++ -1) + + ++ Fuel quality is vital
Reformulating fuel ++ 0 ++ + ++ Refinery emissions
Mass transit + + + ++ + High investment
Vehicle maintenance + +/0 ++ + + Particularly developing countries Vehicle scrappage + + - + 0 Particularly developing countries Engine downsizing
++ ++ - 0 - High speed and strong
engine popular
Electric/hybrid cars ++ ++ 0 - ? Mid-long term
Fuel cell cars
++ ++ ? - ? Long term, clean H2 pro-
duction required
Traffic management + + + 0/- +
Energy conservation
(demand) ++ ++ + +/- +
Many long-term options can be developed Energy conservation
(supply) ++ + + 0/- +
Often cost-effective in long term
Renewables ++ ++ +/- - + Long-term in particular
Nuclear
++ ++ - 0/- - Public opinion differs
across regions
Hydrogen ++ ++ +/0 - - Clean H2 source critical
CNG or LPG replacing
diesel/gasoline ++ ++ +/- +/- +
Supply and safety crucial Gasoline replacing die-
sel + - + + +
CO2 increases
Fuel quality ++ 0 2) ++ + ++ Life cycle impacts
Combustion technology ++ ++ ++ 0/- +
Combustion process ++ 0 + 0 +
Flue gas treatment ++ -1) ++ + ++ Common practice
Industry relocation
+ 0 +/- +/- + Particularly developing
countries
VOC mitigation + 0 +/0 0 +/0 Sources are diffuse
Gas cooking stoves
+ +3) ? + + Particularly developing
countries Reduce wood stoves in
cities + +
3)
0 ? - Particularly developing
countries
Forest fire management + + ++ + 0?
If the indication is ‘0’, a neutral result is expected when applying the criterion. ‘Acceptability’ refers to the general (public and private) initial response and perception of the measure. In the case of costs, a ‘+’ indicates that the option is relatively cheap. ‘Ease of implementation’ indicates whether an option can be implemented in a relatively simple way and is already common practice.
1) The increase in energy consumption as a result of tailpipe controls and flue gas treatment is 1-3% 2) Radiative forcing of sulphate particles not taken into account
3) Assuming biomass is not harvested from sustainable sources
Climate change → air quality
In its Third Assessment Report (2001), the IPCC distinguishes different sectors for the implementation of climate policy. In this section, only those sectors identified in Table 6.3 as producing air pollution will be evaluated. The sectors are energy production, industry, transport, and household (mainly in developing coun- tries). Table 6.10 highlights the air quality impacts of climate measures as identified by IPCC in the relevant sectors.
A distinction has to be made between industrialized countries and developing countries with respect to some of the options. Health damage as a consequence of air pollution in developing countries is often more severe than that in urban areas of industrialized countries with comparable economic activity. It is crucial that the air quality is improved from a very detrimental quality to a reasonable quality. Particulate matter poses the strongest health threats. Technical options to achieve this already exist and could be implemented in the short term. Policy can be designed in such a way that climate benefits are generated. If there are sufficient sup- plies, the introduction of alternative fuels in the transport sector is a promising option. CNG has proven to be successful in several cases already.
For industrialized countries, or countries where cleaner technology is already implemented, achieving further improvements with current technologies that are widely applied is more difficult. It might be that in the mid- to long-term, other approaches are necessary, which can be categorized as long-term climate change mitigat- ing measures, to ensure a further decrease in air pollutant concentration. Sustainable energy production and lower-emission fuels are more than likely vital for achieving this. In this report, hydrogen cars and renewable or nuclear energy are only briefly mentioned. However, they have to be looked at more closely as they are unambiguously synergetic in the aims of air quality and climate change policy.
Table 6.10 Air quality impacts of climate change mitigation measures.
Climate change mitigation measure Air quality impacts Remarks Conversion efficiency + Photovoltaic + No emissions1) Wind energy + No emissions1)
R
enewa
bl
e ene
rgy
Biomass 0/- Tailpipe controls for NOx and heavy metals required
Nuclear +
Fuel switch coal → gas + Reduction in sulphur, NOx and PM emissions
Ener g y pr o duc ti on CO2 capture and storage +/0
Decreases energy efficiency of the power plant, but capture of CO2
enables end-of-pipe capture of pollutants Hybrid electric cars + Motor efficiency improvements
Fuel cell technology + Low-emission technology Technological
efficiency + Less fuel use through efficiency increase
Transport
Fuel switch gasoline ->
diesel -
Energy efficiency + Reduced use of fossil fuels in production processes
Indu
stry
Material efficiency + First results from IPCC indicate large potential Fuel switch for local
heating and cooking + Sharp reduction of indoor air pollutants Cooking stoves + Sharp reduction of indoor air pollutants
Ho
use
hol
d
sector SHS for lighting + Kerosene or gas replacement
A ‘+’ indicates synergy, a ‘-’ indicates that the climate option is contributing to air pollution
1) except for emissions from manufacture
It can be concluded that many technical measures to mitigate climate change are similar to those abating air pollution. Potential competing measures arise mainly in the technologies that cost energy to mitigate air pol- lutions. These are mainly end-of-pipe technologies in either the industrial or transport sectors. Conversely, the only point of focus in climate change policy that may interfere with air quality is energy production through biomass combustion. Biomass is notoriously rich in nitrogen compounds and even heavy metals, and is - compared to fossil fuels - relatively heterogeneous, leading to a higher risk incomplete combustion, and thus particulate matter. This could be relieved by applying end-of-pipe technology for air pollutants abate- ment, but this would decrease the energy efficiency and the financial feasibility of bioenergy.
6.4.3. Impact of policy instruments
Air quality ↔ climate change
The air quality policy instruments described in 6.2.2, and applied in one of the cases in Section 6.3, are dis- cussed here in relation to their impact on climate change policy. The policy options are divided into manda- tory environmental standards, other command-and-control instruments, and market-based instruments. As the same instruments can be applied to both climate policy and air quality policy, the interaction of instru- ments is thought to occur mainly in the technical measures. The impacts of climate policy instruments on air quality instruments is therefore not considered, since the synergies and trade-offs are in qualitative terms mu- tually interchangeable.
Table 6.11 Climate change mitigation evaluation of a selection of policy instruments for air pollution abatement as discussed in Section 6.2.2
Policy option Climate change impact
Remarks
Air quality standards 0/-
Often, co-benefits will be small or negative as they highly depend on the technical options that are applied to comply with the standards.
Technological perform- ance standards +/-
Interaction with climate change depends on the indicated or Best Available Technology
Fuel standards 0/+ Co-benefits small Energy efficiency
standards ++
Reduction in use of energy addresses the same cause which causes climate change
Ma ndat o ry e n v iro nme n ta l standa rds
Relocating industry 0 Total emissions do not change, possible decrease in ozone formation
Mandatory labelling and reporting of envi- ronmental performance
0/+ Measures improve the transparency of the industry and may have indirect positive effects on climate
Traffic management 0/+
More efficient use of vehicles so less emissions. The GHG reduction of the associated more efficient use of fuel may be offset by increase in number of vehicles as driving becomes more attractive Ot he r c o mma n d -a n d -c ont rol pol ic y
Mass transit system + Co-benefits if use of private vehicles is reduced.
Environmental taxes +/-
Co-benefits depend a lot on type of tax: incentive may be to implement cheap end-of-pipe measures that decrease energy efficiency
Subsidies, tax credit or
tax rebate +
Depends on target measure: e.g. subsidy for CNG or LPG will have positive climate co-benefits
Emissions trading NOx/SO2
+/- Incentive for cheap options, which often decrease energy efficiency Market-base d i n centive s Stimulation of public transport +
Price incentives are given to replace the use of private vehi- cles
Table 6.11 indicates that there is potential for climate change benefits from air policy. The following general remarks can be made about this indication:
- Much of the maximising of the benefits is dependent on the technology chosen to implement the standard or to comply with the target. Since the co-benefits and trade-offs for specific technical measures are known and the policy effect can also be estimated, it is crucial that policy provides the right incentives. - A sensible choice should be made between effect and source-aimed policy. Effect-aimed policy has the
benefit of being very targeted, but inherently induces no incentive in other policy fields and therefore lim- its co-benefits for other problems. It can even cause trade-offs, for instance when end-of-pipe technology causes a rise in fuel use. Policy aimed at the source of pollution is generally more effective in terms of synergetic effects.
- In market-based instruments targeting one problem, e.g. air pollution, incentives are specifically directed to cheap emission reduction measures but without taking into account the likely increase of greenhouse gas emissions. Command-and-control instruments can be better designed so as to achieve the maximum benefits for air quality as well as climate change. A number of options that are more or less effective for reducing air pollution have low or no effect on climate change. These include the relocation of industries, fuel standards and fuel combustion technology.
Policy interaction could take place in the sense of the most cost-efficient policy instrument being chosen for one of the two problems. This, of course, means that the other problem is not mitigated in the most cost- effective way. In general, any policy instrument that has been designed to optimize the effect in one field will be less effective in the other (Sorrel and Sijm, 2003).
6.4.4. Synergies and trade-offs of air pollution and climate change mitiga-
tion
In Section 6.2.1 it was concluded that air pollution and climate change problems are different in terms of timescales; both in impacts and in the effects of measures. In general, the mitigation measures that achieve deep reductions in CO2 emissions for climate change aim at transitions in the longer term. Most climate
change mitigation measures provide structural solutions for air quality problems. If greenhouse gas emis- sions are reduced in the longer term (over more than 30 years), most air pollution problems will be automati- cally solved. A notable exception to this is indoor air pollution in developing countries, which is more related to poverty and access to technology than to the availability of affordable technology itself. In terms of tech- nology, bioenergy is the only climate change mitigation technology that could seriously enhance air pollu- tion, but this appears to be manageable with end-of-pipe technology for emission control, or even with CO2
capture and storage, or with process improvements.
Points for attention
The cases in Section 6.3 have shown that the air quality problems and related health impacts of several im- portant players in the climate negotiations could be resolved in a more structured and climate-friendly man- ner. With support from the literature, Section 6.4.1 showed that significant cost reductions in environmental policy implementation can be achieved by sensibly combining air quality policy and climate policy - also in the significant countries: the United States, the EU, India, and China. Structurally addressing indoor air pol- lution in poor areas has significant co-benefits in the fields of combating desertification, health improvement, and poverty alleviation. Finally, Sections 6.4.2 and 6.4.3 examined policies and measures in a more detailed manner, and we have learnt that there is a lot of potential for synergy between air quality policy and climate policy in the technical sense, but also for trade-offs in policies and measures in air pollution and climate change. The information provided so far contains important lessons for the design of air quality policy and climate policy:
1. The leading countries in the climate negotiations, in particular the United States, EU, China and India) could profit significantly from structural climate policy in the sense that their costs of air pollution (both policy implementation costs, and the costs of the impacts of poor air quality) would decrease. Using flexible mechanisms in GHG abatement will of course benefit the host country, but not the investing