Businesses Need More Regulation, Not Less: EEA Report on Costs of Air Pollution from Industrial Facilities

March 1, 2015 | By Robert Emmet Hernan

In last month’s ieBLOG, we wrote about “The Myth of the Costs of Environmental Regulation on Businesses,” and discussed studies that dispelled that myth. A recent OECD study concluded that, “The bottom line result is that, overall, an increase in stringency of environmental policies does not harm productivity growth or productivity levels – neither at the level of the entire economy nor at that of manufacturing industries.” In fact the study found that “a tightening in environmental policy stringency is associated with a subsequent short run increase in productivity growth, for the economy as a whole and in particular for the most productive industries and firms.”

We also pointed out that the businesses and industries that whine about the intrusion of governmental regulation have no problem with the intrusion of governmental subsidies, reaching between $660 and $900 billion per year just for fossil fuel companies. We suggested that any further studies of the costs of environmental regulations should include any offsets from subsidies.

Now we can add another dimension to this regulation cost issue, thanks to a recent report from the European Environment Agency (EEA) on the Costs of air pollution from European industrial facilities 2008-2012. This is the second assessment of the cost of damages to health and the environment in monetary terms from air pollution released by 14,325 industrial facilities in the EU-27, Norway and Switzerland. The damages include respiratory diseases, reduced productivity through lost work days, decreased agricultural yields, and harm to the wider environment from increased eutrophication and acidification.

The aggregated costs, over the period 2008-2012, is estimated at between €329 billion up to €1,053 billion. The costs decreased over the time period due to ongoing impacts of environmental regulations and the economic recession.

These costs are underestimated because the assessment does not include the harm to biodiversity from air pollution, and only industrial facilities that exceed certain thresholds are included. And this just addresses risks from their air emissions.

The assessment found that 147, or 1%, of the facilities accounted for 50% of the total damage costs, many of which are in the power-generating and energy sector. The report notes that while many of the most polluting facilities are large, we need to regulate emissions from smaller facilities because their emissions can contribute significantly to harmful effects on the local scale.

The bottom line of the assessment is “that substantial health and environmental benefits would result if emissions of pollutants were to reduce from industrial facilities in the future.” At 12. We can be assured that any such benefits will come from regulation, not from voluntary action by the facilities.

Clearly the simplest way to resolve the concerns of businesses over environmental regulation is for them to eliminate the emissions of pollutants from their facilities and then there would not be a need for the emission regulations. Of course the elimination of the harmful emissions would have to be completed before any reduction in regulations.

Sources

European Environment Agency, Costs of air pollution from European industrial facilities 2008-2012 (25 Nov 2014) (Report No 20/20140.  www.eea.europa.eu/articles/how-much-does-industrial-air

“The Myth of the Costs of Environmental Regulation on Businesses,” in the ieBLOG section of irish environment (1 Feb 2015). www.irishenvironment.com/blog/myth-costs-environmental-regulation-businesses/

“Time to Change: the Deadly Game of Fossil Fuel Subsidies,” in the Reports section of irish environment (1 Nov 2014). www.irishenvironment.com/reports/time-change-deadly-game-fossil-fuel-subsidies/