Florian Krüger & Freya Hofmann 1

Air Pollution in China – an economical overview

Final Presentation – June 23, 2015

Florian Krüger & Freya Hofmann

Agenda

1 AQI & Introduction to Pollutants

2 Cost-Benefit Analysis & Optimal Abatement

3 Conclusions & Outlook

Introduction: The Air Quality Index

Introduction: Types of Pollutants.

Particulate matter (PMx)

- fine suspended particles (solid or liquid)

- main cause: burning of fossil fuels

Sulfur Oxides (SOX)

- combustion of coal and petroleum, industrial processes

- acid rain

Nitrogen Oxides (NOX)

- high temperature combustion

- brown haze dome above cities, sharp odor

Carbon Monoxide (CO)

- incomplete combustion of natural gas, coal or wood

- colorless, odorless, toxic

Carbon Dioxide (CO2)*

- colorless, odorless

- combustion of fossil fuels, deforerstation, biomass burning, cement production

Others

- VOCs - Persistant free radicals - Toxic metals, Radioactive

pollutants, Ammonia...

Chlorofluorocarbons*

- harmful to the ozone layer, allows UV rays to reach the earth‘s surface

*GHG

Finest particulate matter

PM2,5

Severe effects on human health, heart and lung diseases!

„Particulate matter“

Particles < 2,5 micrometers

Combustion particles

Organic compounds

Metals

others

Monitored in China since 2012!

Source: courtesy of the US, 2009

Particualte matter worldwide

Air pollution has been an unusually severe problem in China, especially in the north and east.

Source: courtesy of the US, 2009

WHO Limits for PM2.5: 10 µg/m3 annual mean 25 µg/m3 24-hour mean

Composition of PM 2,5 differs by region

PM2,5

PM2,5 composition differs!

• organic and elemental carbon secondary inorganic ions (SO4

2−, NO3− and NH4

+)

• crustal species, such as Si, Al, Ca, and Mg

Carbonaceous particles and secondary inorganic ions accounted for more than 70% of the PM2.5

Source: Fang et. Al,2008

1. Burning of coal 2. Vehicular emissions 3. Facilities/ Industry 4. Resuspended particulars

First measures begin to have an effect

Since air pollution is directly related to energy use, which in turn is closely associated with economic development, the accelerated economic development inevitably resulted in proportionally accelerated environmental deterioration.

Source: Cleantechnica, 2014

Cost-Benefit Analysis

negative human health effect lower labor productivity crop damage, ...

cheap electricity from fossil fuels, heat, transport...

Abatement

Benefits (A)

Costs (A)

Maximized Net Benefit

Net benefits of abatement = benefits – costs

An economically efficient level of abatement A* is one that maximizes the net benefits of abatement.

A*

Where to draw the line?

Trade-off between the cost of mitigation and level of pollution

Costs of Pollution vs. Benefits of Pollution

Available Abatement Options

What are marginal abatement costs?

= costs of abating (reducing emissions by) one unit of CO2-eq greenhouse gasses

Source: McKinsey

Conclusions

Master Thesis Proposal - Florian Krüger , 29.05.2015 11

1. Air Pollution is a highly complicated and comprehensive topic!

2. In March 2014, during the National People's Congress, China's Premier Li Keqiang

declared “war on smog and pollution”. Adopted revisions to the Environmental Protection Law, with financial and other punishments for illegal emissions being increased. The new revisions go into effect from January 1, 2015.

3. National China Carbon Trading Scheme to be launched in 2016.

4. Incentives have to be given to energy, industry and transport sector in form of subsidies or regulations.

5. Regulations and caps have to be enforced by authorities!

6. Chances for new developed industry and Service Sector as well!

Scenario Outlook

Master Thesis Proposal - Florian Krüger , 29.05.2015 12

1. A holistic assessment of current air pollution abatement technologies in a certain segment of the power generation (i.e. PM2,5 emitted from coal fired power plants). This has to include their cost structures in implementation in new plants as well as retro fitting or maintenance and overhaul.

2. According to selected abatement technologies the outcome will be a high/low pollution scenario regarding factors like economic growth, increasing energy demand and further interdependencies.

3. A political framework should be integrated in the model to show possible leverage points for subsidies or regulations and their impact on the selected scenario.

4. Synergy and effiency effects can be reached between several pollutant – abatement methods (i.e. CO2 and PM2,5)

Q&A Thanks for your attention.