Co-benefits of climate policy

Global climate policy will reduce outdoor air pollution

Synergy between air pollution and climate policies

Combustion of fossil energy leads to climate change and air pollution. The OECD, therefore, posed the question if a global climate policy could bring additional benefits by reducing outdoor air pollution, with the associated positive effects on public health. The potential additional benefits can be an extra incentive for countries to participate in a future climate agreement. The study by the Netherlands Environmental Assessment Agency (PBL) indicates that there is in-deed a synergy between these policy areas. An integrated strategy tackling climate change and air pollution will reduce the policy costs and generate a net welfare benefit at the global level.

The co-benefits of uniform carbon prices around the world will in the medium term be-come visible in the rich OECD countries, and in the longer run in non-OECD countries. In these latter countries, however, the costs of such a uniform global climate policy would initially outweigh the benefits of better air quality. Moreover, the PBL report re-veals that in developing countries these air quality improvements can be achieved more cheaply by pursuing a directed air quality policy.

Insufficient incentive

Although the indirect benefits of climate policy – improved air quality and public health – could be an additional incentive for countries to participate in a future climate agreement, they are too small to outweigh the costs of climate pol-icy. For example, in 2050, the costs of such a climate policy in China – under which greenhouse gas emissions are 80% lower than the baseline trend without that policy – will amount to 6.5% of the country’s GDP. Meanwhile, the benefits will be equivalent to 4.5% of GDP. However, these benefits could also be achieved through a more tar-geted air quality policy. In China, such a targeted air quality policy could achieve the same air quality improvements by 2050, at a cost of 1.8% of GDP.

Stringent air pollution policy

This study also shows that a stringent air quality policy can lead to a reduction in emissions of greenhouse gases. For example, if China pursues a stringent air policy to reduce the number of premature deaths from chronic exposure to outdoor air pollution by 70%, by 2050 (compared with a baseline trend without policy), this policy will lower GDP in 2050 by 7%. The air quality benefits would be equivalent to 7.5% of GDP, while greenhouse gas emissions would be 40% lower.