Economic Costs

Zhou, Mi, Hongxun Liu, Liqun Peng, Yue Qin, Dan Chen, Lin Zhang, and Denise L. Mauzerall+. “Environmental benefits and household costs of clean heating options in northern China.” Nature Sustainability (2021).Abstract
The Chinese government accelerated the clean residential heating transition in northern China as part of a successful effort to improve regional air quality. Meanwhile, China has committed to carbon neutrality by 2060, making strategic choices for long-term decarbonization of the residential sector necessary. However, the synergies and trade-offs for health and carbon of alternative heating options and associated costs have not been systematically considered. Here we investigate air-quality–health–carbon interdependencies as well as household costs of using electricity (heat pumps or resistance heaters), gas or clean coal for residential heating for individual provinces across northern China. We find substantial air-quality and health benefits, varied carbon emissions and increased heating costs across clean heating options. With the 2015 power mix, gas heaters offer the largest health–carbon co-benefits, while resistance heaters lead to health–carbon trade-offs. As the power grid decarbonizes, by 2030 heat pumps achieve the largest health–carbon synergies of the options we analysed. Despite high capital costs, heat pumps generally have the lowest operating costs and thus are competitive for long-term use. With increased subsidies on the purchase of heat pumps, the government can facilitate further air-quality improvements and carbon mitigation in the clean heating transition.
Full Article PDF
Liu, H, and DL Mauzerall+. “Costs of clean heating in China: Evidence from rural households in the Beijing-Tianjin-Hebei region.” Energy Economics 90 (2020).Abstract
To address severe air pollution, the Chinese government plans to replace most residential coal stoves in northern China with clean heating devices by 2021. Coal stove replacement started in the “Beijing-Tianjin-Hebei (BTH)” region and is expanding throughout northern China. Removing coal stoves reduces air pollutant emissions and hence is beneficial for both air quality and public health, as well as offering greenhouse gas mitigation co-benefits. However, there is little discussion of the economic costs of various clean heating technologies. In this study, we estimate total annual costs (TAC, annualized capital costs plus annual operating costs) for rural households, across cities/counties in the BTH region, to replace their coal stoves with several prevalent clean options—air-source heat pumpswith fan coils (ASHPwF), electric resistance heaters with thermal storage (RHwTS),
natural gas heaters (NGH), and clean coal briquettes with improved stoves (CCIS). We find: 1) Without subsidies, CCIS have the lowest TAC of all clean options. TAC of unsubsidized CCIS approximately doubles TAC of raw coal with improved stoves (RCIS), while unsubsidized electric/gas heaters cost 3–5 times more than RCIS. Thus, it is important for governments to financially support households' replacement of their coal stoves with clean heaters to facilitatewidespread adoption. 2)With subsidies, CCIS have the lowest TAC in all regions except Beijing. In Beijing, generous subsides make ASHPwF—themost energy-efficient option—have the lowest TAC. In Tianjin, TAC of subsidized ASHPwF are slightly higher than CCIS and NGH. Throughout Hebei, except for a few severely cold northern counties where gas prices are high, subsidized NGH have lower TAC than ASHPwF and RHwTS. 3) Cost competitiveness of ASHPwF increases as heat demand increases, (e.g., higher desired indoor temperatures, larger home sizes, etc.) indicating that ASHP are good options for households with larger home sizes and commercial buildings. 4) Substantial potential exists to reduce heating expenses by improving building energy efficiency particularly in severely cold regions. 5) Cost advantages of NGH vary sharply with gas prices.
Full Article PDF
Mauzerall, D. L, B. Sultan, J Kim, and D. Bradford. “NOx Emissions: Variability in Ozone Production, Resulting Health Damages and Economic Costs.” Atmospheric Environment 39, no. 16 (2005): 2851-2866.Abstract
We present a proof-of-concept analysis of the measurement of the health damage of ozone (O3) produced from nitrogen oxides ðNOx ¼ NO þ NO2Þ emitted by individual large point sources in the eastern United States. We use a regional atmospheric model of the eastern United States, the Comprehensive Air quality Model with Extensions (CAMx), to quantify the variable impact that a fixed quantity of NOx emitted from individual sources can have on the downwind concentration of surface O3, depending on temperature and local biogenic hydrocarbon emissions. We also examine the dependence of resulting O3-related health damages on the size of the exposed population. The investigation is relevant to the increasingly widely used ‘‘cap and trade’’ approach to NOx regulation, which presumes that shifts of emissions over time and space, holding the total fixed over the course of the summer O3 season, will have minimal effect on the environmental outcome. By contrast, we show that a shift of a unit of NOx emissions from one place or time to another could result in large changes in resulting health effects due to O3 formation and exposure. We indicate how the type of modeling carried out here might be used to attach externality-correcting prices to emissions. Charging emitters fees that are commensurate with the damage caused by their NOx emissions would create an incentive for emitters to reduce emissions at times and in locations where they cause the largest damage.
Full Article PDF