Cap-and-trade carbon plans slash health costs: MIT study

Massive savings to health-care spending can be had if governments implement a cap-and-trade carbon reduction program, say researchers at the Massachusetts Institute of Technology (MIT).

In their study, the MIT researchers examined three types of carbon reduction policies in the U.S. and their effect on health-care spending and published their findings in the journal Nature Climate Change.

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While previous studies have found that death rates from emphysema, asthma and pneumonia fell dramatically as air quality improved, they did not examine the economics of emission reduction policies.

"The carbon policies are just the first step,” said co-author Noelle Selin in the study. Selin is an assistant professor of engineering systems and atmospheric chemistry at MIT.

“To manage climate change, we’ll have to make carbon cuts that go beyond the initial reductions that lead to the largest air-pollution benefits.”

Selin and her team analyzed the health benefits to the economic cost of three climate policies:

• A clean-energy standard.
• A transportation policy.
• A cap and trade policy

Clean-energy policies require power plants to lower their emissions whereas a transportation policy is aimed at vehicles.

In a cap-and-trade system, the government puts a cap on the total amount of pollution industry is allowed to emit. Each company would receive permits for how much pollution it could produce. If a company produces less than its limit, it could sell — or trade — permits to other companies that have gone over their limit.

Researchers used comprehensive models of both the economy and the atmosphere in 231 U.S. counties in 2011 to come up with their results.

They pinpointed the health effects of ground-level ozone and fine particulate matter, both of which trigger asthma attacks, cause heart and lung disease and can lead to premature death.

They discovered that the greatest health savings came from the cap-and-trade program, with savings coming in at 10.5 times the $14.5-billion cost of such a program.

Meanwhile, a clean energy policy came in second, garnering $247 billion in health savings compared to the program’s $208-million cost.

A transportation standard requiring fuel-economy standards only nabbed a quarter of its $1 trillion cost.

The study was supported by funding from the Environmental Protection Agency’s Science to Achieve Results program.