Technical Background to the ABC-iCAP report: Socio-Economic Analysis of Air Pollution and Climate Forcer Emission Reductions in the Arctic Council Member States with Special Focus on Black Carbon and Methane Emissions

This report has been prepared as one of the deliverables under the project Arctic Black Carbon impacting on Climate and Air Pollution (ABC-iCAP), funded by the European Union’s Partnership Instrument under the EU Foreign Policy Instrument (FPI). We have assessed the health, climate and socio-economic benefits of mitigating air pollution and climate forcers in the Arctic Council member states. We have compared the socio-economic benefits with the investment costs in technical feasible reductions of air pollutants and phasedown of fossil fuel energy according to three different air pollutants and climate forcers emission scenarios for the Arctic Council member states. A less ambitious baseline, current legislation (CLE), scenario was compared with scenarios with larger investments in technologies and policies to reduce emissions of air pollutants and climate forcers. The reference year was set to 2020. We analyzed the differences between the scenarios in the years 2030 and 2050. The socio-economic costs of climate forcers emissions were assessed using the concept of social cost of climate forcers. Air pollution - mortality related costs were calculated using the concept of monetary valuation of a statistical life.Our analysis demonstrates that investments in maximum technically feasible emission reductions (MFR) of air pollutants and short-lived climate forcers are efficient when it comes to reducing the air pollution related mortality and morbidity but insufficient as a climate mitigation option. Efficient climate mitigation requires a rapid phasedown of the production and use of fossil fuels. With phasedown of fossil fuels, as represented by the analyzed maximum technical feasible emission reduction and sustainable development (MFR&SD) transition scenario, the global surface temperature impact from climate forcers emissions by 2050 could be reduced by 49-58 %, 10-30 years after the emissions have occurred. Although we only considered the social costs for four climate damage sectors (agriculture, heat-stress related mortality, building energy expenditures and sea level rise), the calculated climate damage costs are immense. We estimated that the Arctic Council member states’ anthropogenic climate forcers emissions, in one single year as of 2020, result in a social cost of 1.4 trillion € (0.3-3.2 trillion €, 5 to 95 percentile range), integrated over the coming decades to centuries. This corresponds to ~5 % of the Arctic Council member states GDP in 2020. Of these climate warming damage costs, ~85 % can be attributed to carbon dioxide, ~9 % to methane, ~4 % to nitrous oxide and ~2 % to black carbon emissions. The emission sectors with the largest climate impacts, as well as climate change mitigation potentials, are power and heating plants, transports, industries, and residential combustion. Depending on which PM2.5 mortality exposure response function that is used, the estimated socio-economic costs of air pollution related mortality amount to between 680-1270 billion € in 2020. With investments in maximum technical feasible reductions of air pollutants and short-lived climate forcers without substantial reductions in the use of fossil fuels, as represented by the analyzed MFR scenario, the air pollution - mortality and morbidity related costs can be reduced with 42-68% in 2050, while with the MFR&SD scenario the costs can be reduced with 47-75%. Thus, active climate change mitigation policies are beneficial also from air pollution related health and social cost perspectives.The full socio-economic analysis shows that both the MFR and the MFR&SD scenario is highly socio-economically beneficial. In 2050 the net benefit of the MFR and MFR&SD scenarios, as compared with the CLE scenario, amounts to 510 (260-770) billion € and 830 (110-1850) billion €, respectively. The socio-economic benefits of the reduced air pollution and prevented climate change are in the same order of magnitude. The total benefit of climate forcers emission reductions in year 2050 are estimated to be 630 (150-1400) billion € while the improved air quality saves an additional 600 (350-840) billion €. The largest costs in the MFR&SD scenario are related to investments in renewable energy, with an estimated cost of 380 billion €.To reach the MFR&SD scenario, approximately in line with the 2 °C global warming target set by the Paris Agreement, the Arctic Council member states need to take the lead in rapidly phasing down the use of fossil fuels, as this is a prerequisite for effective climate mitigation. We suggest that more sectors and climate forcers could be considered for inclusion in the EU emission trading system and that USA and Canada should consider introducing similar national emission trading systems as soon as possible.

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