ETC/ATNI Report 18/2019: Development of a refined methodology for the EEA externalities assessment.

The EEA has published two reports assessing the costs of air pollution from EU industrial facilities (EEA, 2011 & 2014). The assessments involved two stages: a calculation of damage costs per tonne of pollutant emitted and per country, and an assessment of externalities of industrial facilities by multiplying their emissions with the damage costs per tonne of pollutant. These reports were carried out based on best practice at the time, with the 2014 report presenting an updated assessment of the 2011 report. In advance of a further update of this assessment in 2020, the EEA invited its European Topic Centre on air pollution, transport, noise, and industrial pollution (ETC/ATNI) to critically review the methods used in the 2014 report and to identify areas where improvements could be made to further strengthen the outputs from the assessment. The review covered the whole impact pathway assessment (IPA) route, from emissions through exposure to the quantification of health and environmental impacts and their valuation, as well as the consideration of uncertainties. The team involved INERIS and Aether, with EMRC as an external consultant, as well as NILU as internal reviewer. A draft of the report made suggestions for possible adjustments of the approach and explicitly formulated questions as part of a written consultation with a range of experts on the different steps of the impact pathway approach that took place in autumn 2019. The final report takes account of the expert feedback. It makes the following recommendations: • Continue estimating damage costs per tonne of pollutant emitted for the main air pollutants ammonia (NH3), nitrogen oxides (NOx), non-methane volatile organic compounds (NMVOCs), primary particulate matter (PM2.5, PM10) and sulphur oxide (SO2), the heavy metals arsenic, cadmium, chromium, lead, mercury and nickel, the organic compounds 1,3 butadiene, benzene, dioxins/furans and polycyclic aromatic hydrocarbon and the greenhouse gas CO2. Include two additional greenhouse gases in the analysis: methane and nitrous oxide. • With respect to atmospheric transport (dispersion) and transformation of the main air pollutants, use the most up to date EMEP source receptor matrices for PM2.5 and ozone. Use the Sherpa model with a higher resolution to develop grid-to-grid source receptor relationships for the assessment of NO2 health impacts. • Consider using the Sherpa model to calculate sectoral adjustment factors to adapt the sector average damage costs per tonne of pollutant to specific sectors. This allows accounting for differences between sectors in the height of pollutant emissions and in their vicinity to population. • Continue including damage costs for emissions of the major air pollutants that cover the impact of emission per tonne of pollutant from a particular country, wherever the impacts occur. Additionally present the damage occurring only in the emitter country. • Extend future EEA assessments to include health impacts from NO2. • Continue using the same approaches to the calculation of impacts on crops, forests and building materials as in earlier assessments. • For trace metals and organic pollutants, include additional health impacts into the assessment (e.g. mortality). • Include into the assessment the calculation of biodiversity effects from deposition of NH3 and NO2 for exceedances of critical loads in Natura 2000 areas. • Update the monetary unit estimate for a VSL to the OECD (2012) value, which is also in line with the approach in the DG MOVE Transport cost handbook. Update the VOLY estimate to be consistent with this VSL estimate. Any update of cost figures for morbidity impacts should be carried out in agreement with European Commission services to ensure that there are not inconsistencies in approach across the Commission and its agencies. • Concerning carbon valuation, the unit value to be chosen should ideally be accepted by DG CLIMA and be consistent across EC services. In the absence of guidance from the EC, the approach and values applied in the DG MOVE study could be used.

09 Mar 2021

Prepared by:

Simone Schucht (Ineris), Elsa Real (Ineris), Mike Holland (EMRC), Lucy Garland (Aether), Mark Gibbs (Aether), Augustin Colette (Ineris)

The EEA has published two reports assessing the costs of air pollution from EU industrial facilities (EEA, 2011 & 2014). The assessments involved two stages: a calculation of damage costs per tonne of pollutant emitted and per country, and an assessment of externalities of industrial facilities by multiplying their emissions with the damage costs per tonne of pollutant.

These reports were carried out based on best practice at the time, with the 2014 report presenting an updated assessment of the 2011 report. In advance of a further update of this assessment in 2020 the EEA invited its European Topic Centre on air pollution, transport, noise, and industrial pollution (ETC/ATNI) to critically review the methods used in the 2014 report and to identify areas where improvements could be made to further strengthen the outputs from the assessment.

The review is the objective of the present report. It covered the whole impact pathway assessment (IPA) route, from emissions through exposure to the quantification of health and environmental impacts and their valuation, as well as the consideration of uncertainties. The review involved a written consultation with experts on the different steps of the impact pathway approach that took place in October 2019. The present report takes account of the expert feedback and makes suggestions for possible adjustments of the approach.

The report reviews the methods for assessing the costs of air pollution from EU industrial facilities used in the EEA (2014) report to identify areas where improvements could be made to further strengthen the outputs from the assessment.

Recommendations were made with respect to dispersion and exposure modelling, estimation of sectoral adjustment factors, quantification and monetisation of impacts, and with respect to the scope of the analysis (pollutants considered, impacts assessed, years and countries included …).