Reducing Greenhouse Gas Emissions and Improving Air Quality
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life is justified on its own. Economic analyses of these effects from better air
quality can be difficult to conduct because many of the benefits are difficult
to quantify (e.g. quality of life, fewer/ less severe illnesses, fewer childhood
health issues, fewer premature deaths). When these effects are estimated,
though, they are substantial benefits relative to the costs.
11.4 Government Economic Action
A number of government actions have impacts on greenhouse gas emissions
and air quality (see Chapter 10). Inexpensive energy is beneficial because it
reduces the costs of manufacturing products, heating, air conditioning, and
transportation. Import and export prices are impacted by the cost of energy,
and the balance of trade is impacted by energy subsidies that governments
implement. Because inexpensive energy is tied to so many other things –
things that governments often are quite interested in promoting – energy
production costs can be a target for government actions. Thus, it is sometimes
necessary to look at not only the direct costs of energy generation, including
environmental impacts from that process, but also the government taxes and
incentives that may be in place to create a lower energy cost experience than
the actual generation and impacts (i.e. true costs) would otherwise create.
The International Monetary Fund has published a working paper in which
the authors have attempted to estimate the subsidies associated with fossil
fuels (Coady et al., 2019). Global subsidies were estimated to be $4.7 trillion
in 2015 and $5.2 trillion in 2017 (6.3% and 6.5% of global GDP in 2015 and
2017 respectively). The estimated subsidies for specific countries in 2015
were: $1.4 trillion for China, $649 billion for the USA, $551 billion for Russia,
$289 billion for the EU, and $209 billion for India. Coal is the largest source
of subsidies at 44%, and petroleum is 41%, followed by natural gas at 10%.
These subsidies distort the true costs of energy production, and they alone
provide a strong economic case for moving away from those energy production means. Over and above all of that are all the good economic reasons to
reduce greenhouse gas emissions by transitioning to renewable energy to
generate electricity and zero- emission transportation options.
References
ALA (2018). State of the Air 2018, American Lung Association.
Burke, M., Hsiang, S.M., Miguel, E. (2015). Global nonlinear effect of temperature on
economic production. Nature 527: 235– 239.
106
1 0 6
life is justified on its own. Economic analyses of these effects from better air
quality can be difficult to conduct because many of the benefits are difficult
to quantify (e.g. quality of life, fewer/ less severe illnesses, fewer childhood
health issues, fewer premature deaths). When these effects are estimated,
though, they are substantial benefits relative to the costs.
11.4 Government Economic Action
A number of government actions have impacts on greenhouse gas emissions
and air quality (see Chapter 10). Inexpensive energy is beneficial because it
reduces the costs of manufacturing products, heating, air conditioning, and
transportation. Import and export prices are impacted by the cost of energy,
and the balance of trade is impacted by energy subsidies that governments
implement. Because inexpensive energy is tied to so many other things –
things that governments often are quite interested in promoting – energy
production costs can be a target for government actions. Thus, it is sometimes
necessary to look at not only the direct costs of energy generation, including
environmental impacts from that process, but also the government taxes and
incentives that may be in place to create a lower energy cost experience than
the actual generation and impacts (i.e. true costs) would otherwise create.
The International Monetary Fund has published a working paper in which
the authors have attempted to estimate the subsidies associated with fossil
fuels (Coady et al., 2019). Global subsidies were estimated to be $4.7 trillion
in 2015 and $5.2 trillion in 2017 (6.3% and 6.5% of global GDP in 2015 and
2017 respectively). The estimated subsidies for specific countries in 2015
were: $1.4 trillion for China, $649 billion for the USA, $551 billion for Russia,
$289 billion for the EU, and $209 billion for India. Coal is the largest source
of subsidies at 44%, and petroleum is 41%, followed by natural gas at 10%.
These subsidies distort the true costs of energy production, and they alone
provide a strong economic case for moving away from those energy production means. Over and above all of that are all the good economic reasons to
reduce greenhouse gas emissions by transitioning to renewable energy to
generate electricity and zero- emission transportation options.
References
ALA (2018). State of the Air 2018, American Lung Association.
Burke, M., Hsiang, S.M., Miguel, E. (2015). Global nonlinear effect of temperature on
economic production. Nature 527: 235– 239.