Good and bad in the clean energy transition

Triple Crisis

There is good news and bad news about the clean energy transition. The good news is that half the new electric generating capacity installed worldwide in 2008-2010 was renewable. The bad news is that half wasn't.

To avoid rapid global warming and its attendant human and economic risks, we need to accelerate the transition. We need to do more than slower growth in the use of fossil fuels: we need to cut their use substantially. This will require significantly ramped up investments worldwide in energy efficiency and clean energy.

One way to encourage this investment is to base public policies on the full range of benefits from reduced burning of fossil fuels – not only global benefits from reduced greenhouse gas emissions, but also local benefits from reduced emissions of particulates, nitrogen oxides, sulfur dioxide, carbon monoxide, mercury, benzene, and other toxic pollutants.

In the European Union, research has shown that the clean air benefits alone are sufficient to justify investments in energy efficiency and renewables. “The welfare effects of climate policy seem to be positive,” a 2006 report for the Netherlands Environmental Agency concluded, “even when the long-term benefits of avoided climate impacts are not taken into account.”

The clean air co-benefits of climate policy may be even greater elsewhere, in countries with less stringent air pollution controls than Europe. In a recent study we cite World Bank data indicating that in the United States the human health damages from particulate emissions are six times higher per ton of carbon dioxide than the average for Germany, France and the United Kingdom. In China, the ratio is more than 10 times higher.

It would be ironic if energy policies designed to internalise the external costs of greenhouse gas emissions were to ignore the external costs of co-pollutants. But there is an important difference between two. The benefits of reduced greenhouse gas emissions are global, whereas air quality benefits of reduced co-pollutant emissions are local.

The difference matters for three reasons:

-- Efficiency: From a climate change standpoint, it doesn't matter where emission reductions occur. From an air quality standpoint, it can matter a lot. Co-pollutant damages vary depending on the type of fossil fuel, pollution control technologies, and the population density of the surrounding area. Efficient policy design would aim for greater emission reductions where the public health benefits are greater.

-- Equity: Low-income and minority communities often bear disproportionate pollution burdens. In the United States, for example, blacks, Latinos and other minorities account for 50 per cent of the human health impacts from air toxics emissions from petroleum refineries, considerably more than their 31 per cent share in the national population. Air quality benefits are in the sweet spot where equity and efficiency intersect.

-- Political salience: Last but not least, the air quality benefits of reduced use of fossil fuels are immediate as well as local. For both reasons, they may be critical in building public support for clean energy policies. Neglecting these benefits in policy design would not only be tantamount leaving health care dollars lying on the ground – or floating in the air – it would also mean foregoing crucial allies in the battle to curb the use of fossil fuels.

In our study, Cooling the Planet, Clearing the Air, we outline a variety of ways to bring air quality benefits to bear on climate policy. Specific locations can be designated as priority zones under a carbon pricing system, whether a tax or cap-and-permit system. Similarly, specific industrial facilities and sectors can be assigned priority for emission reductions. Community benefit funds can be established to channel some of the rent generated by carbon pricing into environmental and public health investments in overburdened communities.

In the 20th century, environmentalists urged us to “think globally, act locally.” As we embark on the clean energy transition of the 21st century, we also need to think locally when acting globally.

James K Boyce teaches economics at the University of Massachusetts, Amherst, where he directs the program on development, peacebuilding and the environment at the Political Economy Research Institute. He is a founding member of the steering committee of the E3 Network: Economics for Equity and the Environment.

This article was first published by Triple Crisis. Republished with permission.