Externalities Powerpoint show

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16 October 2014 CNREC

Economic Costs of Air-pollution from the Energy Sector

Niels Bisgaard Pedersen, DEA

PROGRAM

Beijing, The Guardian 14/01/2013

Beijing

3

Source: OECD

4

Externalities

A cost or benefit that affects a third party who did not chose to incur that cost/benefit

Noise, air-pollution, water-pollution, accidents, waiting-time in transportation, visual pollution of the landscape, damage on flora and fauna etc.

Local, trans-border and global impacts

Irreversible or reversible damage impacts

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Externalities

PRIVATE COSTS – observed market costs

SOCIAL COSTS – includes damage imposed by harmful air-emissions:

Green-house gasses - Global warming

SO2 – mortality, morbidity, acid rain, damage agriculture and buildings

NOx – increased morbidity/mortality

PM2.5 – increased mortality/morbidity

Ozone – increased mortality/morbidity

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Consequence an negative externality

Price is low and consumption to high, a non-efficient allocation of resources

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Social Costs - Principle

Result:

Produce and consume too much conventional and too little wind energy

China

A Word Bank reports that China’s

PM10 health damage represented nearly

700 billion RMB in 2009 or 2.8% of GDP

CO2 damage represents 1.0 % of GDP

• Material damage from air pollution represents 0.5 % of GDP

Other studies estimate health related costs to pollution are 6% of GDP in 2005

CNREC - DEA Study

CNRECs scenario tool CREAM quantifies the direct cost of energy production from the different energy technologies and the emission of harmful gases from combustion of fossil fuels.

But the more indirect environmental costs are not quantified. This activity will use methodologies from

Europe, meteorological modelling for China and empiric data from China to integrate environmental cost in CREAM.

Focus will be on health effect on human health from emission of SO2, NOx, and CO2.

CNREC responsible: Xie Xuxuan.

DEA responsible: Niels Bisgaard Pedersen.

External Assistance Yanxu Zhang, Harvard University

Impact Pathway Approach

Methodologies

Source – Scenarios

Result

Emissions of CO2, SO2, SO4,

NOx, PM2.5, PM10 etc.

Dispersion in the air.

Travelling distance possibly chemical reactions in the atmosphere (atmospheric dispersion models)

Increase in pollutants concentration at receptor sites

(concentration of substances in the air)

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Dose-response function, exposure-response or concentration-response function

Monetary evaluation

Impacts on human health in terms of mortality and morbidity

Economic Cost (loss of income, costs for health system)

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CNREC

– DEA Scenarios 2015 - 2050

CO2 emissions in million ton per year

10000

9000

8000

7000

6000

5000

4000

3000

2000

1000

0

REF

Renewable Energy

12

7

6

5

4

3

2

1

0

10

9

8

CNREC

– DEA Scenarios 2015 - 2050

SO2 emissions in million ton per year

Reference Scenario

Max Renewable Energy

13

7

6

5

4

3

2

1

0

10

9

8

CNREC

– DEA Scenarios 2015 - 2050

NOx emissions in million ton per year

Reference Scenario

Max Renewable Energy

14

7

6

5

4

3

2

1

0

10

9

8

CNREC

– DEA Scenarios 2015 - 2050

VOC emissions in million ton per year

Reference Scenario

Max Renewable Energy

Atmospheric Dispersion Model

An air-quality model for China (GEOS-

Chem)

Present day meteorological data (2004) and future emission data for 2015, 2020,

2030, 2040 and 2050

Spatial allocation based on existing inventories for China

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Predicted difference in concentration of ozone 2050 REF – MAX RE

50 o

N

45 o

N

40 o

N

35 o

N

30 o

N

25 o

N

20 o

N

80 o

E 90 o

E 100 o

E 110 o

E 120 o

E 130 o

E

0.00

1.50

3.00

4.50

6.00

ppbv

Predicted diffence in concentration of

PM2.5 non-dust 2050 - REF – MAX RE

50 o

N

45 o

N

40 o

N

35 o

N

30 o

N

25 o

N

20 o

N

80 o

E 90 o

E 100 o

E 110 o

E 120 o

E 130 o

E

2.50

5.00

7.50

10.00

17

0.00

ug/m3

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Predicted diffence in concentration of

SO2 2050 REF – MAX RE

19

Predicted diffence in concentration of

NOx 2050 - REF – MAX RE

50 o

N

45 o

N

40 o

N

35 o

N

30 o

N

25 o

N

20 o

N

80 o

E 90 o

E 100 o

E 110 o

E 120 o

E 130 o

E

0.00

1.00

2.00

3.00

4.00

ppbv

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Pollutants and their impacts

Primary Pollutant

Particles

SO2

Secondary

Pollutant

SO4

NOx

NOx

NOx+VOC

CO

Greenhouse Gases

Sulphates

Nitrates

Ozone

Impacts (Endpoints)

Mortality

Cardio-pulmonary morbidity

Mortality

Cardio-pulmonary morbidity

Like particles

Morbidity (? Not verified)

Like particles

Mortality

Morbidity

Mortality

Morbidity

None directly (Global warming)

Impact of harmful air- emissions

• Estimation of human health impacts based on responsiveness to air-quality

• Impact Response function ΔMort= y

0

y

0 is the baseline mortality rate,

(1-e

-βΔC

)Pop

β is the concentration-response factor,

• ΔC is the concentration difference of pollutants between RE and REF scenarios,

Pop is the exposed population.

β is derived from relative risks (RR) estimated in long-term epidemiological studies assuming log-linear relationships between pollutant concentrations and RR

Quantification of impact of harmful air- emissions

Mortality from Ozone and PM2.5

• Ozone a concentration-response factor of 0.52%

(0.27%-0.77% as 95% confidence interval) increase in mortality per 10 ppbv increase of ozone (Bell et al.,

2004)

• PM2.5: Mean of four studies over China: 0.35% per 10

μg/m

3 increase and 2.96% per 10 μg/m

3 increase for long term impacts

NOx impacts are uncertain and SO2 impacts are relatively small

Population and mortality data for each province is based on National Bureau of Statistics of China

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Avoided number of deaths in China by following

Max RE scenario 2015 -2050

100000

90000

80000

70000

60000

50000

40000

30000

20000

10000

0

2015

PM2.5

Ozone

2020

Avoided death are estimated to 1 750

000 for the period

2015 - 2050

2030 2040 2050

Economic valuation of health impact of harmful air- emissions

• Monetisation according damage costs principles:

• Mortality

Lost income/Willingness To Pay (WTP)/Value of Statistical

Life (VSL)

VSL willingness to pay for a small reduction in the risk of premature mortality

• Morbidity

• Increased illness, hospitalisation, medication, lost working days (respiratory diseases)

VSL for China = 1.68 million RMB in 2010 price level

Economic Value = 2.9 trillion RMB 2015 – 2050 = 83 billion RMB per year in average

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Economic costs from premature mortality in Million RMB

Difference between REF and MAX RE

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

PM2.5

Ozone

Marginal costs benefits of emission on human health in China - RE scenario

+- 10%

SO2 RMB per ton

4 800

Nox RMB per ton VOC RMB per ton

21 900 2 700

Economic Costs of CO2 emissions

Source Costs of CO2 per ton Comment

ExternE project

Emission Trade

Systems China

Emission Trade

System Europe

Environmental

Protection Agency

25 USD

3.6 – 20 USD

< 1 USD

21 USD

2 700

6 pilot projects

Number of emission permission too high.

Long term forecast 45

USD

Damage cost assessment. Recently updated.

Recommended

Economic Costs of air-pollution

Million RMB

700000

600000

500000

400000

300000

200000

100000

0

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CO2

VOC

Nox

SO2

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Future Directions

Uncertainty

More pollutants needs analysed

Solution

PM10 etc.

Only mortality and damage from CO2 is included

Dose – Response function

Spatial allocation of emission the same in the two scenarios

Present meteorological conditions for the whole period

Morbidity, impact in agriculture and material damage should be included

Long term cohort studies in

China

Calculate emissions at a regional level in CREAM

Feed back between air-pollution and climate change needs to be taken into consideration

Internalisation - Policy

• Taxes and duties on CO2, SO2, Nox to reduce pollution

• CO2 trading schemes

• Revenue to support renewable energy deployment wind, solar and biomass

• High environmental standards for power plants, heavy industry, vehicles and fuels

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