As a large share of the air pollutants that reach the Arctic originates from territories outside Arctic Council countries, policy action addressing both long-range pollution and local sources is important to curb pollution. This chapter considers the potential additional benefits for Arctic Council countries of wider geographical adoption of air pollution policies by Arctic Council Observer countries and by the rest of the world. It also models the impacts of global policy action to reduce air pollution alongside climate mitigation and energy transition policies, to highlight the potential additional benefits from such integrated policy action.
The Economic Benefits of Air Quality Improvements in Arctic Council Countries
5. Benefits of wider and integrated policy action
Abstract
5.1. Benefits of wider geographical adoption of air pollution policies
Air quality in Arctic Council countries partly depends on policy action in other regions, as several air pollutants can be transported over long distances. Indeed, limiting transboundary air pollution is recognised as fundamental for reducing air pollution, as stated in the the United Nations Economic Commission for Europe (UNECE) Convention on Long-Range Transboundary Air Pollution (CLRTAP) (UNECE, 2018[1]).
While black carbon emitted closer to the Arctic has a stronger atmospheric warming effect, a greater portion of black carbon particles in the Arctic are emitted from non-Arctic sources (AMAP, 2011[2]), including neighbouring countries, such as Ukraine, China, and many European countries (Sarofim et al., 2009[3]). Black carbon emissions from outside Arctic countries account for two-thirds of black carbon’s warming effects in the Arctic (AMAP, 2015[4]). For this reason, policy action addressing both long-range pollution and local sources is important to curb BC pollution in the Arctic.
The implementation of air pollution policies in a wider group of countries would not only be beneficial for the countries implementing the policies, but also for other areas. In order to assess the extent to which Arctic Council countries would benefit from emission reductions taking place in other countries, this section compares the original two scenarios with two new ones: (1) maximum technically feasible reductions implemented in Arctic Council and Observer countries (MTFR-AC&Obs);1 and (2) MTFR implemented at the global level (MTFR-Global). Comparing these additional scenarios with the scenario previously presented focusing on Arctic Council countries (MTFR-AC) highlights the interactions among the three country groups (i.e. Arctic Council countries, Arctic Council Observer countries, and the rest of the world). Due to data limitations, this chapter focuses solely on the benefits of policy action, without taking into account the costs.2
Understanding the impact of wider policy action on air pollution is particularly relevant as many countries outside the Arctic Council show large potential for emission reductions. According to the modelling analysis, the most substantial emission reductions would take place in Observer countries, followed by the rest of the world (see Figure 5.1 for PM2.5 projections).
Figure 5.1. Projected global PM2.5 concentrations with wider policy action
Annual average anthropogenic PM2.5 concentrations, μg/m3, 2050
Note: μg/m3: micrograms per cubic metre.
Source: EC-JRC’s TM5-FASST model.
Relatively speaking, Arctic Council countries would contribute a smaller share of emission reductions. This is explained by the fact that some large air pollution emitters, such as China and India, are amongst the Observers. Figure 5.2 shows the potential for reductions of PM2.5 concentrations in Arctic Council countries when other countries are acting. The comparison of average atmospheric concentrations of PM2.5 in Arctic Council countries in the four scenarios highlights the role of transboundary air pollution. For example, PM2.5 concentrations in Nordic countries are particularly dependent on emission levels in the Observers, due to Nordic countries’ proximity to European Observer countries. Following the same principle, PM2.5 concentrations in Russia are at their lowest when MTFR policies are implemented globally, due to the proximity of other Eurasian major emitters. In the United States and Canada, however, PM2.5 concentrations are less dependent on emission reductions in neighbouring countries.
Figure 5.2. Projected average PM2.5 concentrations in Arctic Council countries with wider policy action
Annual average population-weighted anthropogenic PM2.5 concentrations, μg/m3, 2050
Note: μg/m3: micrograms per cubic metre.
Source: EC-JRC’s TM5-FASST model.
By 2050, the global implementation of the MTFR scenario (MTFR-Global) would save 20% more lives in Arctic Council countries than the MTFR-AC scenario, implying 100 000 fewer air pollution-related deaths a year than in the CLE scenario (Figure 5.3). Nevertheless, the largest mortality reductions in Arctic Council countries are attributed to air quality improvements from domestic policy action, amounting to around 80 000 fewer deaths.
Similarly, mortality reductions are attributed to air quality improvements within the region also in the other two country groups (Observers and rest of the world). Hence, by reducing their pollutant emissions, every country would also benefit from improved human and environmental health domestically, as displayed in Figure 5.3.
Figure 5.3. Projected impact of wider policy action on air pollution-related mortality
Thousands deaths per year, 2050
Notes: Each graph shows the number of deaths in that region projected from the different levels of geographical coverage of the MTFR policy. Each graph shows the potential additional contribution of each country group to reducing mortality. The bar on the left shows the initial values from the baseline (CLE) scenario, from which the contribution of each scenario is subtracted, to arrive at the total (MTFR-Global). The graphs relate to premature deaths due to fine particles as well as ground-level ozone.
Source: ENV-Linkages’ model projections, based on Global Burden of Disease (GBD, 2018[5]).
The reduction in mortality translates into significant welfare improvements. By 2050, compared to action by Arctic Council countries alone, when Arctic Council Observers also implement air pollution policies, welfare improvements in Arctic Council countries would amount to USD 15 billion more per year. There would be an additional USD 56 billion in welfare benefits in Arctic Council countries if all countries were to implement MTFR policies, bringing the total to USD 339 billion (Table 5.1). The implementation of MTFR policies in Arctic Council and Observer countries would improve global welfare by almost USD 2 trillion every year by the middle of the century compared to the continuation of current policies, with 15% of this total welfare improvement taking place in Arctic Council countries. In the MTFR-Global scenario, global annual welfare improvements would be even higher, reaching over USD 3 trillion by 2050 (Table 5.1).
Table 5.1. Projected welfare improvements by region with wider policy action
Comparison with the CLE scenario, annual impact, billion USD 2017 PPP, 2050
Source: (OECD, 2020[6]), Air Quality and Health: Mortality and welfare cost from exposure to air pollution (database); (Holland, 2014[7]), Cost-benefit Analysis of Final Policy Scenarios for the EU Clean Air Package; and ENV-Linkages’ model projections.
There would be additional economic benefits from the reduced market impacts of air pollution (for impacts on sectoral productivity and consumption choices in the MTFR-AC scenario; see Chapter 4). For example, as PM2.5 emissions are reduced in a broader number of countries, the resulting health and environmental improvements lead to lower market costs of air pollution in most countries and regions, eventually resulting in higher economic growth. However, the necessary investments in BATs are likely to be particularly large for countries with high levels of air pollution or laxer air pollution policies. Overall, a wider implementation of MTFR policies is likely to have positive consequences for the competitiveness of manufacturers in Arctic Council countries. As industries in trading partner countries also implement similar regulations, they are likely to face similar costs, thus levelling the playing field across countries and making it easier for countries to tighten their policies.
5.2. Benefits of integrating air pollution, climate mitigation and energy transition policies
Air pollution, climate mitigation and energy policies are strongly linked due to significant overlaps in emission sources and policy solutions. Thus, addressing key emitting sectors, such as transport and fossil-fuel based power generation, can achieve joint benefits for tackling both air pollution and climate change (Lanzi and Dellink, 2019[8]). Air pollution policies can lead to structural change in the economy, specifically driving a shift in production towards cleaner sectors; this would also lower greenhouse gas emissions. Similarly, climate mitigation and energy policies can reduce air pollution. For example, reducing fossil fuel combustion is normally beneficial for both climate mitigation and air quality, except when fossil fuel is substituted with biomass combustion for residential heating, which increases emissions of combustion-related air pollutants, such as black carbon.
In order to assess the interactions among air pollution, climate mitigation and energy transition policies, this section considers a scenario that includes the global coverage of the MTFR scenario (MTFR-Global) together with the implementation of the Sustainable Development Scenario (SDS) developed by the International Energy Agency (IEA) for the World Energy Outlook (IEA, 2018[9]). This scenario (MTFR-SDS) represents a more stringent policy mix that targets air pollution while also implementing climate mitigation policies and a transition to a cleaner energy system (IEA, 2018[9]). The modelling analysis explores the potential environmental, health and welfare benefits of this integrated policy action. Due to data limitations, however, the analysis does not take into account the costs of policy action.
In the MTFR-SDS scenario, countries would see air pollution fall even more substantially than under the MTFR-Global scenario alone. This is the case for Arctic Council countries (Panel A, Figure 5.4), as well as across the globe (Panel B, Figure 5.4). At the same time, the MTFR-SDS scenario has the potential to slow down global warming. Greenhouse gas emissions are already projected to decline in the MTFR‑Global scenario, as illustrated for carbon dioxide (CO2), nitrous oxide (N2O),and methane (CH4). This highlights the potential for air pollution policies to also contribute to mitigating climate change. However, the MTFR-SDS scenario involves greater curbs on GHG emissions– both in Arctic Council countries and at the global level – through climate mitigation and energy policies.
Figure 5.4. Projected air pollution and greenhouse gas emission reductions from integrated policy action
Indexed, CLE = 1, 2050
Source: ENV-Linkages, based on input from IIASA’s GAINS model.
When looking at specific GHGs, methane is the greenhouse gas that shows the strongest interactions with air pollution policies. Indeed, methane emissions are nearly halved when the best available techniques of the MTFR scenario are deployed at the global level (MTFR-Global) (Höglund-Isaksson et al., 2020[10]). The MTFR-SDS scenario leads to further methane emission reductions. These synergetic effects in the reduction of air pollutants and methane emissions are important, especially given the high radiative forcing of methane, which on a 100-year timeframe has a warming potential 28 times higher than that of CO2, as estimated in the Fifth IPCC Assessment Report (IPCC, 2013[11]). These changes in methane emissions refer exclusively to anthropogenic sources. Natural sources of methane, such as oceans and soils in permafrost regions, are not accounted for in this analysis, as they result from natural processes. Nonetheless, even natural releases of methane can be exacerbated by global warming. Thus, reducing the emissions of greenhouse gas and short-lived climate pollutants, such as black carbon, would also generate additional co-benefits in and beyond the Arctic, by reducing the risk of natural methane releases.
Besides significant climate co-benefits, the implementation of more stringent policies under the MTFR-SDS scenario would also reduce mortality associated with exposure to PM2.5 and ground-level ozone. Overall, by 2050 in the MTFR-SDS scenario, air pollution-related deaths in Arctic Council countries would be half the level of the baseline scenario (CLE) (Figure 5.5, Panel A). Globally by 2050, the MTFR-SDS scenario could avoid half a million more deaths than the MTFR-Global scenario (Figure 5.5, Panel B).
Figure 5.5. Projected impact of integrated policy action on air pollution-related mortality
2050
Notes: The two graphs use different scales (Thousand in Panel A and Million in Panel B). Each graph shows the number of deaths in that region projected from the different levels of policy ambition. Each graph shows the potential additional contribution of the different levels of policy ambition to reducing mortality. The bar on the left shows the initial values from the baseline (CLE) scenario, from which the contribution of each scenario is subtracted, to arrive at the total (Global MTFR-SDS). The graphs relate to premature deaths due to fine particles as well as ground-level ozone.
Source: ENV-Linkages’ model projections, based on Global Burden of Disease (GBD, 2018[5]).
The positive environmental and health outcomes stemming from the MTFR-SDS scenario are likely to translate into welfare improvements, which in comparison to the MTFR-Global scenario, would amount to almost USD 70 billion more in 2050 Arctic Council countries. (Table 5.2). At the global level, compared to the MTFR-Global scenario, the MTFR-SDS scenario would add at least another USD 1 trillion in global welfare benefits by 2050, with 10% of these welfare improvements taking place in Arctic Council countries.
While these estimates only account for welfare improvements from reduced air pollution-related mortality, the mitigating impact on climate change of lower GHG emissions would lead to additional welfare benefits, most notably those resulting from reduced mortality from air-borne diseases, temperature extremes, and climate disasters.
Table 5.2. Projected welfare improvements by region with integrated policy action
Comparison with the CLE scenario, annual impact, billion USD 2017 PPP, 2050
Source: ENV-Linkages’ model projections, based on OECD VLS values from the OECD Environment Database (OECD, 2020[6]); and morbidity values from Holland (2014[7]).
Additional policy action to reduce greenhouse gas emissions is also likely to result in economic benefits from the reduced air pollution impacts. However, as the policy costs of implementing the MTFR-SDS scenario are also likely to be higher, the net macroeconomic effects are difficult to predict.3
Finally, reducing GHG emissions through air pollution, climate mitigation and energy policies would also lead to additional benefits resulting from reduced climate risks and impacts (OECD, 2015[12]). Mitigating climate change at the global level would be particularly beneficial for the Arctic region and its ecosystems. Indeed, the effects of climate change on the Arctic environment – which include a reduction of sea-ice and permafrost, changes in weather and temperataure patterns, severe loss of biodiversity and ecosystem services, and damages to indigenous communities – are becoming increasingly visible. In turn, Arctic warming has severe repercussions at the global level, causing rising sea levels, changes in climate and precipitation patterns, increasing frequency of severe weather events, and loss of fish stocks, among other risks. Therefore, when considering all the regional and global consequences of climate change, the benefits of policy action highlighted in this section are likely to be underestimated.
References
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[1] UNECE (2018), Decision 2018/5 Long-term strategy for the Convention on Long-range Transboundary Air Pollution for 2020−2030 and beyond, https://unece.org/fileadmin/DAM/env/documents/2018/Air/EB/correct_numbering_Decision_2018_5.pdf (accessed on 10 March 2021).
Notes
← 1. This scenario expands policy action to Arctic Council Observer countries, which include China France, Germany, India, Italy, Japan, Korea, the Netherlands, Poland, Singapore, Spain, Switzerland, and the United Kingdom. Observer countries can participate in meetings and areas of work of the Arctic Council. Decisions within the Arctic Council can only be made by the eight Arctic Council countries (Arctic Council, 2019[13]).
← 2. The main reason for this is that detailed regional costs are not available at the global level. In any case, the main analysis is focused on Arctic Council countries, for which estimates of both costs and benefits are calculated.
← 3. A full assessment of the macroeconomic effects of the MTFR-SDS scenario at the global level is beyond the scope of this report.