New Resources for the Future study: carbon pricing reduces air pollution in EJ communities
Joanne Leovy
406 Posts

I’m betting that our Nerd team will dive into this in detail, but I wanted to highlight this new RFF study showing that carbon pricing is more effective than a variety of targeted regulatory strategies for environmentally overburdened communities.

2 Replies

Thanks, @Joanne Leovy. Their finding is consistent with the majority of studies from California, where some EJ advocates have claimed--wrongly--that the state's carbon pricing system is to blame for ongoing emissions and health disparities. See my CCL blog, What California’s experience demonstrates about the effect of carbon pricing on environmental justice.

I've indeed been diving into the details, @Joanne Leovy 🤓

The paper considers a few different policy scenarios proposed in NY and NJ that are aimed specifically at reducing fossil fuel air pollution in environmentally overburdened, disadvantaged communities (EO DACs). The details of these laws haven't yet been ironed out, so the paper models a number of possible policy scenarios and applies them nationwide:

The No New scenario considers that existing power plants won't be touched, but no new fossil fuel power plants will be allowed in these EO DAC communities.

The Reduction scenario also limits the operation of fossil fuel power plants (to basically 20% of their capacity) in these communities such that they can only generate a limited amount of pollution.

The Shutdown scenario goes further and forces polluting fossil fuel power plants in these communities to shut down.

The Upwind Limits scenario is similar to the Reduction scenario, except it says that fossil fuel power plant operations will be limited such that they can only generate a limited amount of pollution in downwind EO DAC communities.

The Carbon Pricing scenario just considers a revenue-neutral modest $15/ton price on CO2 pollution. It's basically Year 1 of the Energy Innovation Act.

They find that when considering air pollution and avoided associated premature deaths specifically in EO DACs, the Upwind Limits scenario does best, with the Carbon Pricing not far behind. The other policy scenarios don't do well:

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And nationwide, i.e. also considering air pollution outside of EO DACs, Carbon Pricing does best with Upwind Limits not too far behind:

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In terms of reducing premature deaths from fossil fuel air pollution in EO DACs vs. elsewhere (in other words, trying to alleviate current environmental/health inequities), Upwind Limits does best, but the Carbon Pricing (and also Shutdown) scenarios are very similar:

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You can see in this next chart how the power generation mix changes in response to each policy scenario. You get more solar and wind with a Carbon Price, compared to more natural gas in the Upwind Limits and Shutdown scenarios. As a result, the climate benefits are biggest in the Carbon Price scenario.

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And overall, the health benefits are about the same between Carbon Pricing and Upwind Limits, but Carbon Pricing has bigger climate benefits and also results in a smaller rise in electricity bills:

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It's all summed up in this table. Carbon pricing results in the smallest costs (and thus the smallest increase in electricity bills), with the biggest net society-wide health and climate benefits. It's ~4 times more cost-effective than the next-best policy considered here, the Upwinds Limits. Although the latter is slightly better at avoiding premature deaths specifically in EO DACs.

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It's also worth noting that a higher/rising carbon price would have a bigger effect on transitioning away from fossil fuel power plants and their air and climate pollution.

So basically if you want to advocate for a policy that will protect frontline communities from air pollution and high energy bills, carbon pricing is a great choice! 🤓

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