Impact Assessment of European Clean Air policies in a CGE framework

In March 2014 the UN World Health Organization (World Health Organization, 2014), released a study reporting that in 2012 one in eight of global deaths were a result of air pollution exposure. As part of a long-term effort, in late 2013, the European Commission (EC) adopted the "The Clean Air Policy Package", where it proposes new air pollution reduction objectives for the period up to 2030, as well as instruments to deliver those objectives. This paper explains in detail the modelling conducted with a Computable General Equilibrium model, GEM-E3, for the EC Impact Assessment of this recent EU policy proposal along with an additional analysis of the benefits deriving from the proposed policies. We show that the expenditure on pollution abatement represents a cost for the abating sectors but also that the expenditure in abatement technologies is an economic opportunity for the sectors that produce these technologies. Moreover, we find that the inclusion of benefits in our analysis, especially those related to health, can offset the resource costs and yield overall marginally positive macro-economic impacts on the European economy.