EnergyCutting carbon emissions more than pays for itself with savings on health care spending

Lower rates of asthma and other health problems are frequently cited as benefits of policies aimed at cutting carbon emissions from sources like power plants and vehicles, because these policies also lead to reductions in other harmful types of air pollution.

Just how large, however, are the health benefits of cleaner air in comparison to the costs of reducing carbon emissions? An MIT release reports that MIT researchers looked at three policies achieving the same reductions in the United States, and found that the savings on health care spending and other costs related to illness can be big — in some cases, more than ten times the cost of policy implementation.

“Carbon-reduction policies significantly improve air quality,” says Noelle Selin, an assistant professor of engineering systems and atmospheric chemistry at MIT, and co-author of a study published today in Nature Climate Change. “In fact, policies aimed at cutting carbon emissions improve air quality by a similar amount as policies specifically targeting air pollution.”

Selin and colleagues compared the health benefits to the economic costs of three climate policies: a clean-energy standard, a transportation policy, and a cap-and-trade program. The three were designed to resemble proposed U.S. climate policies, with the clean-energy standard requiring emissions reductions from power plants similar to those proposed in the Environmental Protection Agency’s Clean Power Plan.

Health savings constant across policies
The researchers found that savings from avoided health problems could recoup 26 percent of the cost to implement a transportation policy, but up to 10.5 times the cost of implementing a cap-and-trade program. The difference depended largely on the costs of the policies, as the savings — in the form of avoided medical care and saved sick days — remained roughly constant: Policies aimed at specific sources of air pollution, such as power plants and vehicles, did not lead to substantially larger benefits than cheaper policies, such as a cap-and-trade approach.

Savings from health benefits dwarf the estimated $14 billion cost of a cap-and-trade program. At the other end of the spectrum, a transportation policy with rigid fuel-economy requirements is the most expensive policy, costing more than $1 trillion in 2006 dollars, with health benefits recouping only a quarter of those costs. The price tag of a clean energy standard fell between the costs of the two other policies, with associated health benefits just edging out costs, at $247 billion versus $208 billion.