Climate Protection Paying Off Twice
Before the EU Emissions Trading System (EU ETS) was introduced in 2005, the earth’s atmosphere was a convenient way for humans to dispose of their waste seemingly limitlessly and cost-free. But ever since the EU intervened, industrial enterprises and power plants have had to pay a fee to use the space that used to be free. The costs for an emissions allowance, giving the holder the right to emit one tonne of carbon dioxide (CO2) equivalent, currently amount to around 77 euros. The redistribution of carbon dioxide emissions within Europe is regarded as another intentional consequence of this trading system. But does this automatically imply the redistribution of the air pollutants that are emitted alongside CO2? And what does this mean for public health in Europe? Mannheim environmental economist Professor Ulrich Wagner is looking for answers to these questions in his ERC-funded project “HEAL”.
Credit: Stefanie Eichler
At 157 meters, the finials of the Cologne Cathedral’s spires are not the only gigantic towers in Germany’s Rhineland region. At less than 20 kilometers linear distance from the cathedral, the chimneys and cooling towers of the Niederaussem power plant reach up into the sky, among them – with 200 m elevation – the highest cooling tower world-wide. The lignite-fired power plant also is the record-holder when it comes to CO2-emissions: in 2015, it caused the third highest greenhouse gas emissions of all European power plants. The clouds of smoke that perpetually cloak its towers bear silent witness to these figures.
It has been seven years since this record was set. The European emissions trading system has been in place for seventeen years. Having grown up in the Rhenish mining district, Ulrich Wagner has been familiar with the sight of giant strip mines and fuming power plants since his early childhood. During our interview, the Economics professor wonders aloud whether this might have been one of the reasons why he chose a career as environmental economist. Then he laughs and starts talking about the “HEAL” project, which is funded by one of the renowned Consolidator Grants of the European Research Council (ERC). The interdisciplinary project combines two research subjects that have been on his mind for some time. “In my research activities, I have already delved into the question of how companies react to carbon pricing. And I have always wanted to do research on air quality since it is a key issue of environmental economics,” Wagner says. In “HEAL”, he brings together these two research areas. The project wants to find out whether more or fewer people in Europe have been exposed to harmful air pollution since emissions trading was introduced, as well as to investigate the economic harm or benefit it might have created.
The focus of Wagner’s research activities is on those air pollutants that are emitted into the atmosphere along with carbon dioxide and which – contrary to CO2 – have a local and regional effect on public health. “Co-pollutants” is what the environmental economist calls these by-products of lignite burning such as nitrogen oxides, sulfur dioxide, soot, particulates, zinc, and arsenic. As such, they are implicitly traded, even though they are not included in the EU ETS. “For a lignite-fired power plant in the Rhineland region to emit one ton less of CO2, a plant somewhere else might burn more coal. Since the CO2 emissions are fixed in the trading system, the emissions would even out in the end. Co-pollutants, on the contrary, are not fixed in the system and vary depending on the respective power plant. For example, power plants in the Rhineland region have different filters installed than those in East Poland. The specific location where the air pollutants are emitted also factors into the matter. Pollutants might affect more people if they are emitted in the direct vicinity of the city of Cologne than if it were somewhere deep in the Polish woodlands,” says Wagner.
Redistributing carbon dioxide emissions within Europe is an intentional consequence of emissions trading as it permits the total costs of avoiding emissions to be minimized. But does that also lead to a redistribution of air pollutants? In order to answer this question, the researcher works with data on co-pollutants from more than 6,000 air polluters participating in the EU ETS. This harbors the opportunity for a double benefit: “If you impose that the Niederaussem power plant may only burn half its usual amount of brown coal from now on, the air pollutants emitted will be automatically cut in half, as well. This will possibly result in a co-benefit: while we do have avoidance costs, from an economic perspective, these are smaller or even cancel out due to the adverse health effects we have avoided,” Wagner explains.
To find out how changes in emission behavior actually affect public health, Wagner has brought an atmospheric chemist into his team. Using a complex calculation model, she simulates the distribution of air pollutants according to weather conditions, topography, and chemical processes. Do they fall to the ground next to the chimney or are they carried further afield by wind and other meteorological conditions? In the end, Wagner wants to have an accurate idea of each individual “cloud” of the power plants being examined and know exactly how far it extends and what the population density is in the area. What motivates him each day is the benefit the “HEAL” project might bring to climate policy in Europe. “The model we are working on can be used to examine many other energy and climate policy measures for their potential co-benefits. This way, I hope to be able to contribute reliable evidence on the potential benefits of climate policy,” Wagner says. Whether the population of Cologne has suffered more or less severe health effects since the introduction of carbon pricing is a question that the environmental economist does not yet have an answer to. It will continue to intrigue him until the project expires in 2025.
Text: Jule Leger / April 2022