European Environment Agency (EEA)

Costs of air pollution from European industrial facilities 2008-2012


Courtesy of European Environment Agency (EEA)

In 2011, the European Environment Agency (EEA) published a first assessment of the costs of air pollution caused by European industrial facilities. The report Revealing the costs of air pollution from industrial facilities in Europe (EEA, 2011) applied a simplified modelling approach to assess the damage costs to health and the environment in 2009, caused by pollutant emissions from industrial facilities officially reported to the European Pollutant Release and Transfer Register (E-PRTR) (1).

Since 2011, the annual assessments of Europe's air quality published by EEA have regularly concluded that, despite a number of past successes in reducing emissions, air quality still needs to improve in order to reduce harm to human health and the environment (2). The need for regularly updated knowledge concerning air pollution sources, the subsequent levels of human and environmental exposure, and its associated costs remains important.

This report presents an updated assessment of the cost of damage to health and the environment in monetary terms from air pollution released in the years 2008 to 2012 by industrial facilities in the EU-27, Norway and Switzerland. The approach employed to estimate damage costs is again based upon existing standard policy tools and methods, such as those originally developed under the EU's Clean Air for Europe (CAFE) programme for the main air pollutants and since updated during the recent review of the European Union's (EU) air pollution policies performed by the European Commission. The assessment also uses other existing models and approaches used to inform policymakers about the damage costs for other pollutants. Together, the methods are used to quantify the impacts and associated damage costs caused by a number of pollutants emitted from industrial facilities, including:

  • the main air pollutants: ammonia (NH3), nitrogen oxides (NOX), non-methane volatile organic compounds (NMVOCs), particulate matter (PM10) and sulphur oxides (SOX);
  • heavy metals: arsenic, cadmium, chromium, lead, mercury and nickel;
  • organic compounds: benzene, dioxins and furans, and polycyclic aromatic hydrocarbons (PAHs);
  • carbon dioxide (CO2).

Each of these pollutants can harm human health, the environment or both. Certain of them contribute to forming ozone and particulate matter in the atmosphere. There are significant differences in terms of the extent of current knowledge between the selected pollutants and the methods available to estimate their respective impacts.

Key findings
The aggregated cost of damage over the period 2008–2012 caused by emissions from the E-PRTR industrial facilities is estimated as being at least EUR2005 329 billion (and up to EUR2005 1 053 billion) (3). Table ES.1 shows the damage costs in each year for the different pollutants assessed in this report.

Across the five-year period as a whole, information was available for a total of 14 325 individual facilities (4). Damage costs from these facilities decreased during the period. Various factors will have contributed to this decrease, including the ongoing impacts of environmental legislation and the economic recession in Europe which resulted in lower rates of industrial activity in years immediately after 2008. The majority of the quantified damage costs is caused by emissions of the main air pollutants and CO2. While damage cost estimates associated with heavy metal and organic pollutant emissions are significantly lower, they still contribute hundreds of millions of euros harm to health and the environment, and at the local scale can cause significant adverse impacts.

For the main air pollutants and CO2, damage costs are expressed as a range. This reflects that for these pollutants, different methods or assumptions are used in the calculations. Furthermore, expressing damage costs as a range helps illustrate the often considerable uncertainty which is inherent in such analyses.

  • For the main air pollutants, the range provided corresponds to the use of two contrasting but complementary approaches for valuing health damage — the value of a life year (VOLY), and a (higher) value of statistical life (VSL) (e.g. OECD, 2012). This report's analysis for the main air pollutants extends to quantifying crop and building material damage from these pollutants but does not include their negative impacts on ecosystem services, such as harm to biodiversity, which in some instances may be significant (5). This implies that the damage costs are therefore likely to be under-estimated.
  • The ranges shown for CO2-related damage costs reflects the difference between the minimum (EUR2005 9.5 per tonne CO2) and maximum values (EUR2005 38.1 per tonne CO2) used in this report for carbon valuation. The present report applies a similar but more nuanced approach to valuing CO2-related damage costs than in the previous 2011 report, in which only a single value for CO2-related damage costs was used (EUR 33.6) based upon a method applied at that time by the UK government for valuing carbon emissions. The selected values used in the present report are based upon carbon price values for the EU Emissions Trading System (ETS) used in policy modelling by the European Commission. This approach provides a reflection of the costs associated with decreasing CO2 emissions over time in line with the required reduction necessary to meet the current policy objective of limiting future limit average global surface temperature increase to two-degrees.

Care is needed when interpreting the results. The E-PRTR Regulation (EU, 2006) requires only those industrial facilities with an activity rate exceeding a defined threshold and emissions exceeding the pollutant-specific thresholds to report information to the register. As a result, the E-PRTR's coverage varies significantly across the different pollutants and sectors. The total cost of damage to health and the environment from all sectors of the economy, including from 'diffuse' sources such as road transport and households, and from all pollutants will therefore be significantly higher than the estimates presented here. The European Commission has, for example, recently estimated that in 2010, the external costs associated with only the main air pollutants were in the range of EUR 330–940 billion (European Commission, 2013a).

As observed in the 2011 report, a limited number of industrial facilities cause the vast majority of the damage costs to health and the environment. Fifty per cent of the total damage cost occurs as a result of emissions from just 147 (or 1 %) of the 14 325 facilities that reported data for releases to air during this period (Figure ES.1 and Map ES.1). Three quarters of the total damage costs were caused by the emissions of 568 facilities (4 % of the total number of facilities), and 90 % of damage costs are attributed to 1 529 facilities (11 % of the total). These findings should, however, not take focus away from the need to also regulate emissions from smaller facilities, which on the local scale can contribute significantly to air pollution and its subsequent harmful impacts.

The report lists the top 30 individual facilities identified as causing the highest damage across the five-year period 2008–2012. Of these, 26 are power‑generating facilities, mainly fuelled by coal/ lignite and located predominantly in Germany and Eastern Europe. Not surprisingly, most of the facilities with high emission damage costs are among the largest facilities in Europe, releasing the greatest amount of pollutants.

A simple ranking of facilities according to their aggregate emission damage costs provides little indication, however, of the relative efficiencies of production. To illustrate this, the differences in environmental efficiencies of power generating facilities were assessed using the reported CO2 emissions from as a proxy for fuel consumption. One difference noted when damage costs from these facilities are normalised by CO2 emissions is that more power generating facilities from eastern Europe appear at the top of the results, indicating they are less environmentally efficient and relatively more damaging to health and the environment.

Of all the industrial sectors included in the E-PRTR pollutant register, emissions from the energy sector contributed the largest share of the damage costs across the five-year period assessed (estimated as at least EUR2005 219 billion (and up to EUR2005 701 billion) (Figure ES.2). Sectors involving production processes and combustion used in manufacturing were responsible for most of the remaining estimated damage costs. Results aggregated by country are shown in Figure ES.3. Not surprisingly, countries such as Germany, Poland, the United Kingdom, France and Italy, which have a high number of large facilities, contribute the most to total estimated damage costs.

As an alternative to weighting damage costs by CO2 emissions as was done for individual facilities, GDP can be used as an indicator of national production to normalise the national damage costs against the respective level of services provided/generated by the national economies (Figure ES.4). When applying this measure, certain countries previously shown as having the highest damage costs — Germany, the United Kingdom, France and Italy — drop significantly down the ranking, while Bulgaria, Romania and Estonia, rise to the top. Poland remains toward the top of the rankings, reflecting the high amounts of pollutants at Polish facilities emitted relative to national gross domestic product.

Finally, as an example of the wider application of the methods developed for estimating air pollution related damage costs, this report shows that if 1 500 large combustion plants in Europe were hypothetically all to meet the emission limit values set in the Industrial Emissions Directive (EU, 2010) for just NOX and SO2, the direct benefits in the EU-27 would be in the order of at least EUR2005 11.2 billion (and up to EUR2005 32.7 billion) per year. This is calculated by coupling the damage costs methodology with the hypothetical emission reduction documented in another recent EEA assessment (EEA, 2013b). In reality, those savings would be significantly greater, as savings would also occur as a result of reduced emissions of other pollutants that were not quantified (e.g. PM10, NMVOCs, heavy metals and organic pollutants). It is clear that regardless of the choice of damage cost values and methodologies employed, substantial health and environmental benefits would result if emissions of pollutants were to reduce from industrial facilities in the future.

New elements of the updated assessment
There are a number of new or updated aspects addressed in the present report compared to the earlier 2011 assessment. These include:

  • Application of new science: the most significant methodological change compared to the 2011 report is an updated methodology to take into account recent air quality model and damage cost developments for the main air pollutants.
  • Data for five consecutive years: The updated methodology has been applied to E-PRTR data from five years — 2008 to 2012.
  • Carbon pricing approaches: There remains a wide range of approaches used to estimate damage costs associated with CO2 or to quantify the benefit of CO2 emission reductions for policy assessment purposes. There is, as yet, no established methodology for this, unlike the situation for the main air pollutants. Uncertainties and limitations associated with these approaches are high. Examples of such approaches include those based upon modelled carbon price forecasts, the social cost of carbon (SCC), marginal abatement costs etc. The present report applies a range of values based upon recent modelled EU Emissions Trading System (ETS) carbon price forecasts performed for the European Commission to support the proposal for a 2030 climate and energy policy framework.
  • Potential damage costs savings: The present report draws on the results of a recent EEA assessment, which investigated the hypothetical emission reduction potential of NOX, SO2 and dust from more than 1 500 of Europe's large combustion plants, to illustrate the scale of associated savings in terms of reduced damage costs.

As with the 2011 EEA report, the present report does not assess whether the emissions of a given facility are consistent with its legal permitted conditions for operating. Furthermore, while presenting the damage costs for human health and the environment from industrial facilities, the report again does not assess the recognised benefits of industrial facilities (such as the production of goods and products, and generating employment and tax revenues). It is important that such benefits of industrial activity are properly recognised, but such an assessment is beyond the scope of this report.

The report identifies several important ways in which the E-PRTR and its implementation might be improved for use in assessment studies. These include:

  • Better completeness of emissions from individual facilities. A number of instances were identified in the course of this updated assessment where it seems clear that certain facilities are not reporting emissions of certain pollutants which are expected to occur above the release thresholds set in the E-PRTR Regulation. Member States should further improve the quality checking of facility information before it is reported to the E-PRTR, particularly to address completeness of data and identify outlying values.
  • Providing information on the fuel consumption or productive output of individual facilities. This would enable the environmental efficiency of facilities to be calculated in terms of estimated damage costs per unit of production or fuel consumption, and allow an increased focus upon resource efficiency. It would also facilitate independent verification of data reported to the register. While the Large Combustion Plant Directive (2001/80/EC) requires Member States to report information on fuel used in the plants, linking these data to the E-PRTR information is difficult.
  • Improved traceability of facilities. Comparing the present study's results with those of previous studies on a facility-by-facility basis was difficult. While some older facilities may have closed since these earlier studies were performed, part of the problem relates to differences in the annual E-PRTR datasets received by the EEA. Facilities often change ownership, name, and/or national facility identification code, creating difficulties in linking the annually reported emissions. Similarly, linking E-PRTR data with information reported under other EU legislation such as the Large Combustion Plant Directive is difficult, due to differences in facility definitions, facility names and identifiers etc. Improved streamlining of information reported under EU legislation would very much benefit assessment activities, while also providing additional means for the verification of official data and potentially reducing the reporting requirements for countries. It is noted in this context that the European Commission is presently undertaking work with a view to ensure the future linking of information reported on large combustion plants with E-PRTR, as well as for streamlining of reporting between the Industrial Emissions Directive (IED) and E-PRTR.

In summary, this report presents an updated methodology that allows for the estimation of damage costs caused by emissions of selected pollutants from industrial facilities included in the E-PRTR. It demonstrates that, compared to using emissions data alone, these methods provide additional insights and transparency into the costs of harm caused by air pollution. The sensitivity of the results to the choice of pollutant specific damage cost values used, as well as the importance of normalising results to take into account a measure of the efficiency of production across the different industrial facilities, is demonstrated. Such insights are particularly valuable in the context of current discussions in Europe on how best to move towards a resource-efficient and low-carbon economy.

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