June 10, 2011

The Economic Impacts of Air Pollution Policies in the EU

This paper uses the computable general equilibrium model called WorldScan to analyse interactions between European air pollution policies and policies aimed at addressing climate change.

WorldScan incorporates the emissions of both greenhouse gases (CO2, N2O and CH4) and air pollutants (SO2, NOx, NH3 and PM2.5). WorldScan has been extended with equations that enable the simulation of end-of-pipe measures that remove pollutants without affecting the emission-producing activity itself. This paper analyzes simulations of air policies in the EU by introducing emission ceilings for air pollutants at the level of member states. The simulations show that mitigation consists of implementing not only emission control technologies, but also efficiency improvements, fuel switching and structural changes. Greenhouse gas emissions thereby decrease, which renders climate change policies less costly. The decrease in the greenhouse gas price may be substantial, depending on the ambition level of the air pollution policy and the context of international climate policies.

 Keywords: air pollution, climate change, energy, co-benefits, interaction policies


Johannes Bollen Read more