Executive Summary

Executive Summary

This report describes work undertaken to provide the UK Government with an understanding of the costs and benefits for the UK of complying with a number of international measures for addressing trans-boundary air pollution:

the European Commission’s proposed National Emissions Ceilings Directive

the closely related Ozone Directive and

the UNECE’s proposed multi-pollutant, multi-effect (also called the 2^nd NO_x) Protocol.

Information presented here will allow DETR to prepare Regulatory Impact Assessments (RIAs) for the UK, in respect of the proposed measures. It will also form the basis for the preparation of Impact Assessments by the Scottish Executive, the National Assembly for Wales and the Northern Ireland Office for their respective countries.

Previous analysis of UK emissions and control costs has been undertaken by IIASA, using the RAINS model, with an analysis of the corresponding benefits by AEA Technology, using the ALPHA model. The accuracy of the analysis carried out for the EC and UNECE using these two models was necessarily limited, because of the broad geographical area subject to analysis. The same is true of the ASAM model, developed by Imperial College, which has previously been used in uncertainty analysis of the RAINS model results. These earlier analyses have been conducted with a resolution of 150x150 km. The work reported here has aimed to provide a more detailed analysis, using the latest available datasets and specifically UK-based models, which have been used previously in work undertaken on behalf of the EC, UNECE and UK Government and have, thus, been widely reviewed. These models offer much higher resolution of the implications of emissions abatement as they operate on a scale of 10x10 km.

The work has drawn upon the expertise of AEA Technology (NETCEN), Imperial College, the Universities of Edinburgh and Lancaster, ITE Monkswood and the Meteorological Office. The models employed include the UK National Atmospheric Emissions Inventory (NAEI 1997), HARM atmospheric dispersion/deposition model, ELMO ozone model, MARACCAS ammonia model and the ALPHA-UK benefits evaluation model.

The scenarios of the future selected for analysis were as follows:

Reference scenario (UKREF), providing baseline emission projections for 2010, the reference year for the study. Under UKREF, UK emissions are based on the 1997 NAEI escalated for future years using provisional projections of industrial growth and fuel use provided by DTI.
J1, which was selected by the UNECE as the guiding scenario for Protocol negotiations;
H1, selected by the EC as the basis for the draft National Emissions Ceilings Directive;
a further scenario which was added towards the end of the study, following the publication of the emissions ceilings negotiated at the 31^st Session of the UNECE Working Group on Strategies, on 2 September 1999. This was termed WGS31c. Full analysis could not be carried out on this scenario in the time available, although an indication of the associated costs and benefits is presented.

The regional allocation of emissions of nitrogen oxides (NO_x), sulphur dioxide (SO₂), volatile organic compounds (VOCs) and ammonia (NH₃) under each of these scenarios is shown in Tables E-1 to E-4.

The estimated costs of reducing UK emissions in line with the selected scenarios are shown in Table E-5, and the regional allocation of costs is shown in Table E-6. It should be noted that the estimated costs of achieving the J1 and H1 scenarios are considerably lower than earlier estimates made by IIASA, which were £447M and £899M, respectively.

Table E-1. Regional allocation of emissions of NO_x (kt)

Scenario

England

Scotland

Wales

N. Ireland

UKREF

992

102

59

32

WGS31c/ J1/H1

987

101

58

32

Table E-2. Regional allocation of emissions of SO₂(kt)

Scenario

England

Scotland

Wales

N. Ireland

UKREF

602

57

100

25

WGS31c

468

43

94

20

J1

362

32

89

16

H1

360

32

89

16

Table E-3. Regional allocation of emissions of VOC (kt)

Scenario

England

Scotland

Wales

N. Ireland

Offshore

UKREF

883

207

55

26

129

WGS31c

852

184

47

26

92

J1

773

174

43

23

87

H1

689

155

39

21

61

Table E-4. Regional allocation of emissions of NH₃(kt)

Scenario

England

Scotland

Wales

N. Ireland

UKREF/WGS31c

202

42

24

30

J1/H1

182

36

20

26

Table E-5 Costs of emission reductions for the UK (£million/year) arising from movement from the UKREF scenario to the scenarios shown.

Scenario

SO₂

NOx

VOC

NH₃^*
Total

WGS31c

34

9

18

0

61

J1

61

9

64

11 – 24

145 - 158

H1

61

9

435

11 - 24

516 - 529

^*Abatement costs for ammonia emissions are shown as a range because of uncertainty about the acceptability of urea substitution, the higher end of the range assuming that it is not adopted.

Table E-6 Regionalised costs (£M/year).

Scenario

England

N. Ireland

Scotland

Wales

Offshore

WGS31c

41

1

8

3

7

J1

108 – 116

4 – 6

16 – 18

7 – 9

8

H1

339 - 347

11 – 13

68 - 71

19 - 21

77

These costs must be set against the wide range of benefits attributable to abatement of the four pollutants. This analysis deals not just with direct effects of the four, but also the effects of associated pollutants chemically derived from these emissions in the atmosphere, particularly secondary aerosols such as ammonium sulphate, and photo-oxidants such as ozone. The effects considered include the following:

effects on health (premature death, hospital admissions, exacerbation of asthma, etc.);
impacts on crops and forests (yield change);
impacts on building materials (change in frequency of repair);
change in ecological sustainability (measured here against critical loads for acidification and eutrophication).

Benefits estimation is often criticised for being subject to a high degree of uncertainty. In this study the analysis is carried out in a structured and transparent manner, that retains information on these uncertainties. Uncertainties, of course, also affect the other half of the analysis – the estimation of abatement costs. A recent review suggests that these costs tend to be overestimated in modelling exercises. This results from the manner in which cost models tend to focus on end-of-pipe measures and, hence, do not account for some potentially cheaper options, and also an inability to account for technological change in the future. It is, clearly, very important to understand the limitations associated with any inputs to an exercise such as this.

The following table provides some of the main results of the benefits assessment. Benefits are split roughly evenly between NO_x, SO₂ and ozone. NH₃ plays a lesser role, reflecting its limited abatement under the scenarios considered.

Table E-7. Key benefits of each scenario, with results showing the total annual benefit to the UK of abatement across the UNECE region (except for H1, where only EU countries participate). All monetised values in 1990£/year.

1990

UKREF

J1

H1

WGS31c

Ecosystem area (%) subject to critical load exceedence for:

Acidification

43%

11%

5.4%

6.2%

9.2%

Eutrophication

11.2%

2.0%

1.0%

1.1%

1.3%

Change from UKREF in damage to:

Crops (£million)

£10M

£17M

Materials (£million)

£15M

£15M

£5M

Premature mortality (cases)

540

530

160

Respiratory hospital admissions

350

380

110

Table E-7 takes the analysis to the same point as the assessment carried out for the National Air Quality Strategy (NAQS). However, it is possible to go further, quantifying more effects on health, damage to forests and so on, and valuing them, although this extension of the analysis is subject to a higher level of uncertainty. This was carried out and, to account for uncertainty, ranges were ascribed to the key variables. Overall this led to a wide range in the benefits. Costs tended to lie between the upper and lower bounds – a clearly inconclusive result. However assessment of benefit-cost ratios (Table E-8) suggests that costs for J1 tend to be towards the lower end of the range, in other words, there appears a reasonable likelihood that the real benefit would exceed the estimated costs. This is not the case for H1, however, where the bias is in the other direction, with costs towards the upper end of the range.

Table E-8. Benefit-cost ratios, with all monetised effects taken into account (excludes damage to cultural heritage and natural ecosystems). Positive numbers denote benefits in excess of costs by the factors quoted. Negative numbers denote costs in excess of quantified benefits by the factors quoted. Columns identify the source of emission and the receptor for benefits of abatement (in both cases this is either UK or full UNECE). Costs applied are the costs to the UK in all cases.

UK to UK

UK to UNECE

UNECE (incl. UK) to UK

J1

Lower bound

-2.38

-1.35

-1.11

Upper bound

4.01

8.04

8.20

H1

Lower bound

-7.14

-3.85

-4.17

Upper bound

1.26

2.77

2.15

WGS31c

Lower bound

Not quantified

Not quantified

Not quantified

Upper bound

Not quantified

Not quantified

Not quantified

Contents Page Chapter 1
Report and site prepared by the National Environmental Technology Centre, part of AEA Technology, on behalf of the UK Department of the Environment, Transport and the Regions

Scenario	England	Scotland	Wales	N. Ireland
UKREF	602	57	100	25
WGS31c	468	43	94	20
J1	362	32	89	16
H1	360	32	89	16

Scenario	SO₂	NOx	VOC	NH₃^*	Total
WGS31c	34	9	18	0	61
J1	61	9	64	11 – 24	145 - 158
H1	61	9	435	11 - 24	516 - 529

	1990	UKREF	J1	H1	WGS31c
Ecosystem area (%) subject to critical load exceedence for:
Acidification	43%	11%	5.4%	6.2%	9.2%
Eutrophication	11.2%	2.0%	1.0%	1.1%	1.3%
Change from UKREF in damage to:
Crops (£million)			£10M	£17M
Materials (£million)			£15M	£15M	£5M
Premature mortality (cases)			540	530	160
Respiratory hospital admissions			350	380	110

	UK to UK	UK to UNECE	UNECE (incl. UK) to UK
J1
Lower bound	-2.38	-1.35	-1.11
Upper bound	4.01	8.04	8.20
H1
Lower bound	-7.14	-3.85	-4.17
Upper bound	1.26	2.77	2.15
WGS31c
Lower bound	Not quantified	Not quantified	Not quantified
Upper bound	Not quantified	Not quantified	Not quantified