Avoiding death by diesel

One for each lung
One for each lung

Today’s post is by  Simon Upton, head of the OECD Environment Directorate, founder and Chair of the Round Table on Sustainable Development, and former New Zealand environment minister.

If I proposed the building of a large industrial enterprise that would lead to the early death of around 40,000 people, I strongly doubt that the idea would survive the evening news.  Yet air pollution from diesel-fuelled road transport kills an estimated 40,000 people a year in France – that’s roughly ten times the number of people who die in road accidents.  Unlike a large, easy-to-target industrial plant, the culprits are millions of mobile combustion sites that whiz around carrying the very people who would oppose my large plant.

At global, regional and national levels, air pollution poses a major challenge to public health.  The OECD’s Environmental Outlook to 2050 projects that between now and 2050, the number of people who die globally from exposure to particulates will more than double from 1.5 million to 3.5 million. Not all of that can be attributed to road transport emissions. But it is a very significant contributor and is getting worse in emerging economies too as rising affluence brings with it increased personal mobility.

Increased mortality also carries a heavy economic cost.  That’s obvious just from anecdotes.  It cannot be good for Beijing’s economy that significant numbers of highly skilled people want to leave or not come there in the first place because of the risk air pollution poses, particularly to their children who are growing up in a soup of particulate and noxious gases.  But these economic costs are quantifiable and they are serious in most developed economies.

One of the tools used to quantify costs is the Valuation of Statistical Life (VSL) which puts a cash value on a human life. Many people don’t like politicians quantifying life or death trade-offs in monetary terms.  However, not making such judgments doesn’t avoid the trade-offs – it just hides them from view. An OECD meta-analysis of VSL estimates suggests a figure of €3.5 million per statistical life in the EU27 for example. This is higher than the €1 or €2 million used by the EU Commission in analyses of policies to limit air pollution, and implies that some policies excluded by the EU may in fact be cost-effective.

How could policy interventions be improved so as to reduce air pollution from road transport and improve human health?

First, apply the policy instruments as close as possible to the problem you are trying to tackle.  For CO2 emissions, the policy instrument of choice is a tax related to the carbon content of the fuel since CO2 emissions are directly linked with that carbon content. For NOx and other exhaust pipe pollutants, the link with the amount of fuel used is not so direct.  The way the vehicle is driven and the type of engine technology is determinant.  Similarly, noise and congestion are not directly linked to fuel-use.  For all these social costs, the ideal policy instrument is road user charges that vary with the place and time of driving, and with the environmental characteristics of the vehicles.

For local air pollutants, any charging or taxing regime should use real world emissions measures, not artificially optimistic test scenarios.  There is a large and widening gap between the emissions standards that countries are imposing and emissions under normal driving conditions. There may have been no real improvement in NOx emissions from diesel vehicles in European countries since the mid-1990s and while there has been some reduction in particulates emissions, there has been an increase in the amount of NO2 from diesel vehicles.

Almost all OECD countries apply much lower tax rates on diesel fuel than on petrol.  There is no conceivable environmental justification for this.  Diesel is responsible for more local air pollutants such as NOx and PM than gasoline – although volatile organic compound (VOC)  emissions from petrol-driven vehicles also can contribute to smog problems in some places. On the CO2 score, diesel is also more polluting, causing higher emissions per litre fuel than petrol.  The fact that you can drive further on a litre of diesel than a litre of gasoline means the benefits of the greater fuel efficiency are entirely captured by the private driver.  And to the extent that high fuel efficiency makes driving cheaper, there is an incentive to drive further – and there is evidence that this tends to be the case with the result that CO2 emissions are not reduced.

An increasing number of cities apply congestion charges, but nationwide road-charging systems are only used in Switzerland, and only for heavy goods vehicles. Some countries have motorway charging systems for heavy goods vehicles that include environmental components, and France and Italy for instance have infrastructure funding systems for all vehicles on their motorways. Given that coverage is partial, traffic can simply divert to non-charged routes, thus redistributing the environmental load.

If the current patchwork quilt of measures is far from ideal, how in a pragmatic way might it be improved?  If a road pricing system is deemed unfeasible for the present, the best approach would be to maintain the current system of fuel taxes but announce the gradual phase-in of a significant increase in tax rates on diesel fuel. After, say, 7-10 years, there would be a significantly higher tax on diesel than on petrol.  Such a timeframe would give both car owners and manufacturers time for the stock of vehicles to turn over to reflect the new pollution priorities.

In principle this could meet the bulk of the pollution reduction objectives that worry people.  If taxes on motor vehicles were maintained – say for fiscal reasons – then it would make sense to take account of local air pollutants in the calculation of tax rates, as Israel has done.

Finally, any package of measures should involve a revision of emission standards to better reflect real-world driving.

Useful links

Simon Upton was one of the key speakers at the EU’s Green Week conference held in Brussels on 4-7 June

OECD work on the environment

Economic evaluation of health impacts due to road traffic-related air pollution: An impact assessment project of Austria, France and Switzerland

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