Reducing Greenhouse Gas Emissions and Improving Air Quality
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This chapter gives an overview of the economics underlying the reduction
of greenhouse gas emissions and the improvement of air quality. Some big
numbers and long time frames are inevitable, but we try to make the economics more understandable where possible. This chapter takes the position
that all the costs and benefits – across individuals, communities, nations, and
the globe – should be considered when assessing the economics of these issues.
To start with, the transition itself, from coal- fired power plants to renewable
electric power, is economically a very large process. There are thousands of
coal- fired power plants, and as they age they tend to gradually become more
expensive to maintain and run. Some existing coal plants are over 50 years
old now. At the same time, the prices for electricity generated by wind and
solar energy have decreased, and continue to decrease. Thus, the economics
associated with the transition from coal to wind and solar are much better in
2019 compared to just 20 years ago.
The transportation transition from combustion power to electric vehicles
(EVs) with batteries similarly depends on economics and advances in
science and technology. Research to develop EVs with better and less expensive batteries has been ongoing for many years, with consistent advances
during that time. Significant progress has been made and battery prices
have decreased to less than $200/ kWh as of 2018. If customers purchase EVs
because they are considered to be the most economical choice, this will help
to advance the transition to EVs. This works hand in hand with the other
important advances in wind and solar energy, which can be used to generate
the electricity for those EVs (see Chapter 4). As the prices decrease for electricity generated with renewable technologies, and the purchase prices of EVs
decrease as well, these will reciprocally influence each other. Once carbonfree electricity has a cost advantage over alternatives, it becomes easier to
expand the amount that is generated.
The needed economic activity associated with transitioning from combustion processes to renewable energy for both transportation and the generation of electricity is of the order of trillions of dollars per year globally. The
importance of reducing combustion emissions by more than 80% by 2050 is
appreciated and recommended by many (Erickson et al., 2017), and this can
be accomplished by electrifying transportation and generating all electricity
with renewable energy (Williams et al., 2012; Erickson, 2017). Since the global
social cost of poor air quality in large cities is of the order of $3 trillion/
year, there is a significant incentive to take action and move forward with
the transition away from combustion processes (Erickson, 2017; Scovronick
et al., 2019). Scovronick et al. have added the benefits of better air quality to
economic cost/ benefit models that address greenhouse gas reductions, and
they have found that actions that reduce emissions and improve air quality
have immediate benefits for society in many parts of the world, especially
in large cities where air quality is poor. The global health benefits of reducing greenhouse gas emissions along an optimal path are of the order of $1
trillion/ year when health is included in the model (Scovronick et al., 2019).
The largest health benefits are in India and China.
102
1 0 2
This chapter gives an overview of the economics underlying the reduction
of greenhouse gas emissions and the improvement of air quality. Some big
numbers and long time frames are inevitable, but we try to make the economics more understandable where possible. This chapter takes the position
that all the costs and benefits – across individuals, communities, nations, and
the globe – should be considered when assessing the economics of these issues.
To start with, the transition itself, from coal- fired power plants to renewable
electric power, is economically a very large process. There are thousands of
coal- fired power plants, and as they age they tend to gradually become more
expensive to maintain and run. Some existing coal plants are over 50 years
old now. At the same time, the prices for electricity generated by wind and
solar energy have decreased, and continue to decrease. Thus, the economics
associated with the transition from coal to wind and solar are much better in
2019 compared to just 20 years ago.
The transportation transition from combustion power to electric vehicles
(EVs) with batteries similarly depends on economics and advances in
science and technology. Research to develop EVs with better and less expensive batteries has been ongoing for many years, with consistent advances
during that time. Significant progress has been made and battery prices
have decreased to less than $200/ kWh as of 2018. If customers purchase EVs
because they are considered to be the most economical choice, this will help
to advance the transition to EVs. This works hand in hand with the other
important advances in wind and solar energy, which can be used to generate
the electricity for those EVs (see Chapter 4). As the prices decrease for electricity generated with renewable technologies, and the purchase prices of EVs
decrease as well, these will reciprocally influence each other. Once carbonfree electricity has a cost advantage over alternatives, it becomes easier to
expand the amount that is generated.
The needed economic activity associated with transitioning from combustion processes to renewable energy for both transportation and the generation of electricity is of the order of trillions of dollars per year globally. The
importance of reducing combustion emissions by more than 80% by 2050 is
appreciated and recommended by many (Erickson et al., 2017), and this can
be accomplished by electrifying transportation and generating all electricity
with renewable energy (Williams et al., 2012; Erickson, 2017). Since the global
social cost of poor air quality in large cities is of the order of $3 trillion/
year, there is a significant incentive to take action and move forward with
the transition away from combustion processes (Erickson, 2017; Scovronick
et al., 2019). Scovronick et al. have added the benefits of better air quality to
economic cost/ benefit models that address greenhouse gas reductions, and
they have found that actions that reduce emissions and improve air quality
have immediate benefits for society in many parts of the world, especially
in large cities where air quality is poor. The global health benefits of reducing greenhouse gas emissions along an optimal path are of the order of $1
trillion/ year when health is included in the model (Scovronick et al., 2019).
The largest health benefits are in India and China.