EUROPEAN COMMISSION

Brussels, 18.12.2013

SWD(2013) 531 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the documents

Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and he Committee of the Regions a Clean Air Programme for Europe

Proposal for a Directive of the European Parliament and of the Council on the limitation of emissions of certain pollutants into the air from medium combustion plants

Proposal for a Directive of the European Parliament and of the Council on the reduction of national emissions of certain atmospheric pollutants and amending Directive 2003/35/EC

Proposal for a Council Decision on the acceptance of the Amendment to the 1999 Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution to Abate Acidification, Eutrophication and Ground-level Ozone

{COM(2013) 517 final}
{COM(2013) 518 final}
{COM(2013) 519 final}
{COM(2013) 520 final}
{SWD(2013) 532 final}

TABLE OF CONTENTS

PART 1/4

Introduction    15

Procedural Issues, Impact Assessment Board, Use of Expertise and

Consultation of Interested Parties    15

2.1.Procedural issues15

2.2.Impact Assessment Board15

2.3.Use of Expertise and Consultation of interested parties16

Review of current Policy, Problem definition and Subsidiarity    17

3.1.The air pollution problem and the policy framework under review17

3.1.1.The problem17

3.1.2.The current policy framework17

3.2.Review of the current policy framework18

3.2.1.Past reduction of air pollutant emissions and impacts18

3.2.2.Validity of objectives and scope, and overall coherence19

3.3.Key outstanding problems20

3.3.1.Health and environmental impacts of air pollution in the EU remain large20

3.3.2.EU air quality standards are widely exceeded in densely-populated areas22

3.3.3.The EU is not on track to meet its long-term air quality objective23

3.4.The main underlying drivers or causes of the outstanding problem24

3.4.1.Exceedance of EU air quality standards24

3.4.1.1.Diesel emissions drive the NO2 and NOx compliance problems24

3.4.1.2.Small scale combustion and concentrated local pollution drive the worst PM compliance problems25

3.4.1.3.Poor co-ordination between national and local action, and lack of capacity at regional and local level26

3.4.2.The EU is not on track to meet its long-term air quality objective27

3.4.2.1.The remaining health impacts from PM and ozone are driven by emissions from a range of sectors27

3.4.2.2.Agricultural ammonia emissions drive the remaining environmental impacts27

3.4.2.3.Sustained background pollution means that local action alone cannot effectively reduce impacts28

3.4.2.4.There remain gaps in the information base for assessing and managing air pollution29

3.5.How will the problem evolve?29

3.5.1.Future trends in air pollution impacts30

3.5.2.Compliance prospects under the current legislation scenario31

3.5.3.Uncertainties and risks associated with baseline projections34

3.6.Who is affected and how?35

3.7.Justification of EU action35

3.7.1.Why can the objectives not be achieved sufficiently by the Member States?36

3.7.2.Can objectives be better achieved by action by the Community?36

Objectives    37

4.1.The long-term strategic objective37

4.2.General objectives relating to updating the present strategy37

4.2.1.Ensure compliance with present air quality policies, and coherence with international commitments, by 2020 at the latest37

4.2.2.Achieve substantial further reduction in health and environmental impacts in the period up to 203037

4.3.Specific objectives37

4.4.Coherence with other policies38

4.5.Organisation of the remainder of the impact assessment39

Achieving the compliance objective by 2020 at the latest    39

5.1.Options to achieve compliance with the existing air policy framework39

5.1.1.Option 1: No additional EU action39

5.1.2.Options 5A-5E: Further EU action to facilitate compliance with the air quality framework41

5.2.Analysis of impacts42

5.2.1.Method42

5.2.2.Environmental Impacts42

5.2.3.Economic and Social Impacts45

5.3.Comparison of options46

5.4.Conclusions48

   Achieving further health and environmental impact reductions up to 2030    48

6.1.Methodology49

6.2.The policy options49

6.2.1.Option 1: No further EU action49

6.2.2.Options 6A-6E: Additional Technical Reduction Measures49

6.3.Impact of options52

6.3.1.Health and environmental impacts52

6.3.2.Economic impacts53

6.3.2.1.Direct expenditure to reach compliance53

6.3.2.2.Affected industries and sectorial impacts54

6.3.2.3.Direct economic benefits due to reduced health and environmental impacts:56

6.3.2.4.Generalized economic benefits from reduced health-related external costs57

6.3.2.5.Broader economic impacts57

6.3.3.Social impacts59

6.4.Comparison of the options59

6.5.Sensitivity analysis61

6.5.1.Changes in the target year62

6.5.2.Interactions with climate policy62

6.5.3.Marginal deviations from the preferred option63

6.5.4.Targets for ozone, acidification and eutrophication64

6.5.5.Addressing methane emissions65

6.5.6.Robustness to variations in the key analytical assumptions66

6.5.7.Burden sharing between Member States67

6.5.8.Summary of sensitivity analysis67

6.6.Policy instruments to achieve the targets68

6.6.1.National Emission Ceilings Directive68

6.6.2.Source controls68

6.7.Competitiveness and SME impacts72

6.8.Trajectory to achieving the long-term objective by 205072

6.9.Conclusions73

Analysis of Options To Reduce emissions from Medium Combustion Plants    74

7.1.Rationale for Action74

7.2.Characteristics of the sector74

7.3.Methodology75

7.4.Policy options75

7.5.Impact analysis76

7.5.1.Environmental impacts76

7.5.2.Economic impacts77

7.5.3.Comparison of options78

7.6.Conclusions and preferred option79

Summary    80

Monitoring and Evaluation    83

9.1.Monitoring and evaluation of the revised TSAP83

9.2.Monitoring and evaluation of the revised NECD84

9.3.Monitoring and evaluation of the proposed legal instrument on MCP84

ANNEX 1 Glossary    85

ANNEX 2 Use of expertise and Consultation of Interested Parties    86

1.1.External expertise86

1.2.Consultation of interested parties87

1.1.1Online consultations87

1.1.2Stakeholder meetings90

ANNEX 3 Air Pollution Impacts and Sources    92

1.    The Main Air Pollution Impacts    92

1.1.Health Effects92

1.2.Acidification93

1.3.Eutrophication93

1.4.Ground-Level Ozone Pollution94

1.5.Climate change95

2.    The main air pollutants and their associated impact pathways    95

3.    The main sources of air pollution    96

ANNEX 4    Review of The Existing EU Air Quality Policy Framework    98

1.    Introduction    98

2.    The scope and procedure for the review    98

2.1.What was reviewed?98

2.2.How was the review organised?100

2.2.1.Design of the review100

2.2.2.Conduct of the review100

2.2.3.Dissemination and use101

PART 2/4

3.    The Thematic Strategy on Air Pollution    102

3.1.Objectives, scope and approach102

3.2.Monitoring, Reporting and Evaluation103

3.3.Relevance104

3.4.Effectiveness105

3.5.Efficiency108

3.6.Relation of the TSAP analysis to emission ceilings and ambient air quality targets110

4.    The Ambient Air Quality Directives    110

4.1.Objectives, scope and approach110

4.2.Monitoring, reporting and evaluation111

4.3.Relevance112

4.4.Effectiveness114

4.5.Efficiency121

5.    The National Emission Ceilings Directive    122

5.1.Objectives, scope and approach122

5.2.Monitoring and Evaluation123

5.3.Relevance123

5.4.Effectiveness124

5.5.Efficiency126

6.    EU Source Control Measures    127

6.1.Objectives, scope and approach127

6.2.Monitoring, reporting and evaluation128

6.3.Relevance128

6.4.Effectiveness130

6.5.Efficiency133

7.    National and Local Source Control Measures    135

7.1.Objectives, scope and approach135

7.2.Monitoring, Reporting and Evaluation135

7.3.Relevance135

7.4.Effectiveness136

7.5.Main orientations for the future137

8.    International action to reduce air pollution    138

8.1.Objectives, scope and approach138

8.2.Monitoring, Evaluation, and Enforcement Provisions139

8.3.Relevance140

8.4.Effectiveness140

8.5.Efficiency141

9.    Coherence of the overall framework    141

9.1.International pollution141

9.2.Background and transboundary pollution within the EU142

9.3.Local pollution142

9.4.Analytical framework for the Thematic Strategy on Air Pollution143

10.    Conclusions and orientations for the review    143

10.1.Validity of objectives and scope, and overall coherence143

10.2.Main outstanding problems144

10.3.Main drivers of the outstanding problems144

10.4.Orientations for the review145

Appendix 4.1     Specific evaluation studies launched for individual policy instruments and the detailed questions addressed    146

1. The Thematic Strategy on Air Pollution (TSAP)    146

2. The Ambient Air Quality Directives (AAQD)    146

3. The National Emission Ceilings Directive (NECD)    146

4. Sector pollution control policies    147

Appendix 4.2     EU versus international air quality standards    148

Appendix 4.3    Examples of national and local air quality management measures    153

Appendix 4.4:    Illustrating local action to reduce air pollutant --The Dresden case    165

Appendix 4.5    Market Based Instruments (MBIs) for promoting clean household heating appliances    158

Appendix 4.6    Lessons Learned from the "Air Implementation Pilot"    159

ANNEX 5    Future air quality projections Assuming No Change in Current Policies    161

1.    Methodology for projecting future emissions and air quality impacts    161

2.    Main assumptions and related uncertainties    161

3.    EU policies included in the current legislation (CLE) baseline    163

4.    Future air pollutant emissions under the current policy scenario    166

4.1.Sulphur dioxide166

4.2.Nitrogen oxides167

4.3.Fine particulate matter167

4.4.Ammonia168

4.5.Volatile organic compounds169

PART 3/4

5.    baseline    177

5.1Compliance with NO2 limit values177

5.2Compliance with PM10 limit values179

5.3Compliance with PM2,5 standards182

6.    Future air pollution impacts under the baseline scenario    183

6.1Health impacts from PM2,5183

6.2Health impacts from ground level ozone184

6.3Eutrophication and biodiversity185

6.4Acidification187

ANNEX 6    Elements of a Future European Clean Air Programme to support Member State Action on Reducing Air Pollution    189

1.    Introduction    189

2.    Action To Improve The Urban Air Quality    190

2.1.Action better identify and address key air pollution sources in urban areas190

2.2.Action to improve the governance of air quality management at national and EU level191

3.    Action to abate agricultural air pollution emissions    191

4.    Action at international level    192

ANNEX 7    Analysis of Policy Scenarios Related to Targets for the Period up to 2030    193

1.    Emission reductions delivered by the respective options    193

2.    Impact reductions delivered by the respective options for post 2020 targets    194

2.1.Health and environmental impacts194

2.2.Economic impacts195

2.2.1 Direct compliance costs195

2.2.2. Affected industries and sectorial impacts197

2.2.3. Direct economic benefits due to reduced health and environmental impacts200

2.2.4. Broader economic impacts201

2.3.Social impacts of gap-closure options203

2.4.Monetised impacts of gap-closure options204

3.    Policy instruments to achieve the interim targets    205

4.    Trajectory to achieving the long-term objective by 2050    207

209

Appendix 7.1    Emission reductions per Member State and per option in 2025 and 2030 (% vs 2005)    210

Appendix 7.2    Annual health impacts due to air pollution per option in 2025 and 2030, EU 28    220

Appendix 7.3    Impact reductions per Member State and per option in 2025 and 2030 (% reductions vs impacts in 2005)    222

Appendix 7.4    Emission reductions required of the Member States in 2025 and 2030 to achieve the impact reduction objectives of the central case Option 6C*    230

Appendix 7.6    Impact reductions in the Member States in 2025 and 2030 in the central case Option 6C* compared to Option 1    235

Appendix 7.7    Indicative emission trajectory towards achieving the long-term objective in 2050    237

ANNEX 8    Sensitivity analyses and risk assessments    242

1.    Testing the robustness of the central case for changes to the target year    242

2.    Interaction with the climate and energy package    243

3.    Emission reductions delivered by further climate change mitigation policy    247

4.    Changes to the growth projections and to progress in energy efficiency and renewables    248

5.    Burden sharing between Member States    252

6.    Further emission controls from international maritime shipping    253

7.    Policy instruments to achieve the interim targets: source controls at EU level    257

7.1.EU-wide source controls in agriculture258

7.2.EU-wide source controls for Medium Combustion Plants (MCP)259

7.3.Updated BAT Conclusions under the IED259

ANNEX 9    Sectorial impacts & Competitiveness proofing    262

1.    Context and definitions    262

2.    Scoping of the competitiveness analysis    262

3.    Supply of abatement technology    263

4.    Demand for abatement technologies: detailed measures and expenditure per sub-sector    263

5.    Sectorial Market Analysis    264

5.1.Metals (iron and steel; and non-ferrous metals)266

5.2.Chemicals270

5.3.Refining273

5.4.Agriculture and livestock rearing275

5.5.Power sector282

5.6.Other energy intensive industries286

5.6.1. Pulp and paper sector286

5.6.2. Cement sector287

5.6.3. Lime sector287

5.6.4. Glass sector288

6.    Conclusions    292

ANNEX 10    Controlling methane emissions    293

1.    Projected methane emissions assuming no change to current policies    293

2.    Differences between Member States    294

3.    Further reduction potential beyond the baseline    295

Annex 11     Detailed analysis of specific objectives related to the NECD    297

1.    Objectives    297

2.    Policy options    297

3.    Impact analysis    299

4.    Specific impacts of the policy options    300

5.    Option comparison    309

6.    Preferred option for revising the NEC D    310

7.    Monitoring and evaluation    311

Appendix 11.1    Standard cost model for assessment of administrative burden    312

Appendix 11.2    Administrative costs by Member State of preferred options (€)    316

Appendix 11.3    Monitoring of effects of pollutants in the environment    317

ANNEX 12    Detailed Analysis for Medium Combustion Plants (MCP)    319

1.    Rationale for action    319

2.    Characteristics of the sector    319

2.1.    Definition of MCP for the purpose of this assessment    319

2.2.    Development of an EU-wide dataset    320

2.3.    Reference situation in 2010    321

2.4.    Overview of current regulation    325

2.4.1.    EU legislation    325

2.4.2.    Gothenburg Protocol    326

2.4.3.    Member States’ national legislation    327

3.    Policy options    329

3.1.    Options determining the emission levels    329

3.2.    Regulatory options    330

4.    Impact Analysis    331

4.1.Methodology, assumptions and uncertainties331

4.1.1.Main methodology331

4.1.2.Uncertainties with respect to input data332

4.1.3.Modelling assumptions332

4.2.Environmental impacts333

4.2.1.SO2 emissions333

4.2.2.NOX emissions333

4.2.3.PM emissions334

4.2.4.Overview of pollutant abatement achieved by the emission level options334

4.3.Economic impacts335

4.3.1.Compliance costs335

4.3.2.Emission monitoring costs337

4.3.3.Administrative costs338

4.3.4.Total costs341

4.3.5.Impacts on small and medium-sized enterprises (SMEs)343

4.3.6.Measures to mitigate impacts on SMEs346

4.3.6.1.Phased implementation346

4.3.6.2.Sectoral exemptions or derogations346

4.3.6.3.Size-related exemptions and derogations347

4.3.6.4.Exemptions or derogations based on operating hours and/or emissions347

4.3.6.5.Financial support348

4.3.6.6.Non-financial support348

4.3.6.7.Conclusion on mitigation measures348

4.3.7.Impacts on intra-EU competition349

4.3.8.Impacts on international competitiveness, trade, and investment flows350

4.4.Social Impacts350

5.    Comparison of policy options and selection of preferred option    350

5.1.Emission reduction351

5.2.Pollutant abatement cost351

5.3.EU compliance with international obligations352

5.4.Administrative costs352

5.5.Impacts on SMEs352

5.6.Option comparision summary352

5.7.Preferred option354

6.    Monitoring and evaluation    354

Appendix 12.1    Emission Values for the different options    355

Appendix 12.2    Emission for 2025 and 2030 for options 7A, 7B and 7C.    360

Appendix 12.3    Overview of annualised compliance costs (€m/year) under options 7C, 7B and 7A (incremental costs to option 1)    361

Appendix 12.4    Annualised compliance costs (€m/year) per Member State under option 7D    362

ANNEX 13    References    363

1.Introduction

This impact assessment comprises the outcome of the review of the EU Air Quality Policy Framework. It includes the outcome of a full ex-post analysis and offers the analytical basis for updating the EU's strategy on air pollution and the development of accompanying legal proposals and non-regulatory actions.

Chapter 2 sums up procedural issues and the consultation of interested parties. Details are provided in Annex 2. Chapter 3 and Annexes 3 and 4 set out the conclusions of the evaluation of existing policy on the policy's performance, the problem definition and the basic rationale for further action. The detailed analysis of the evolution of the problems for the period up to 2030 assuming no change in policy are provided in Annex 5. Chapter 4 describes the two general policy objectives derived from the problem analysis: 1) to deliver the full impact reductions envisaged by the existing air policy framework (by resolving the current non-compliance), and 2) to set out objectives and actions for further reducing impacts for the period up to 2030.

The remaining part of the impact assessment report is organised so as to facilitate the reading of a rather complex analysis. Thus, in a slight departure from the normal impact assessment structure, Chapter 5 presents the options, impact analysis, and comparison of options in pursuit of the first objective focusing mainly on the period up to 2020. Details are provided in Annex 6. Chapter 6 then considers the options, analysis, and comparison related to the second objective with a time horizon up to 2030, in line with the Commission's overall Europe 2020 strategy and related flagship initiatives. Analytical details, including sensitivity and competitiveness analysis are provided in Annexes 7, 8, 9, 10, and 11. Chapter 7 and annex 12 provide further details on the additional impact analysis carried out for the first additional source control measure identified, i.e. controlling emissions from medium combustion plants (MCP). Chapter 8 summarises the conclusions emerging from the analysis whilst monitoring and evaluation issues are considered in Chapter 9. A glossary is provided in Annex 1 and Annex 13 lists all references used in the analysis.

2.Procedural Issues, Impact Assessment Board, Use of Expertise and Consultation of Interested Parties

2.1.Procedural issues

Lead DG: DG ENV

Agenda planning /WP reference: 2013/ENV/001

Impact assessment steering group (IASG)

The impact assessment work was followed by a European Commission Inter-Service Steering Group (ISG) set up by DG ENV which met six times between June 2012 and May 2013. The following Directorates-General (DGs) of the European Commission participated in the work of the group: DG AGRI, DG CLIMA, DG ENER, DG ENTR, DG JRC, DG SANCO, Secretariat-General (SG), DG RTD, and the European Environment Agency (EEA).

2.2.Impact Assessment Board

The draft IA report was submitted to the Board on 5th June 2013 and discussed at the Board meeting 3rd July 2013. Following the ensuing IAB opinion a number of amendments were made in the final version of the IA report. In particular, the following main changes were made:

·the problem analysis and underlying evidence were more clearly brought out by annexing an extended report on the ex-post evaluation of the existing policy framework (Annex 4).

·The scope of the package was better explained by making the links with existing policy instruments clearer, and by including an additional separate chapter (Chapter 7) explaining the necessity and expected impacts of the MCP inititive.

·The costs and benefits of options for the period up to 2020 were set out in more concrete terms in Chapter 5, by including additional quantitative analysis and data in tabular form.

·Monitoring and evaluation arrangements were further detailed and clearly presented also in tabular form

·Procedure- and presentation-wise, stakeholder views were more extensively and precisely presented throughout the text, in particular in chapters 3 and 5. A literature list was annexed to the IA report.

The IA report was resubmitted to the Board on 7th August 2013; the Board issued a revised opinion on 7th September 2013, following which additional amendments were made to the IA report. The main ones are:

·The relationship between the Package and the upcoming Climate and Energy policy framework was clarified by strengthening the analysis of Annex 8 (sensitivity analyses) and updating and strengthening the analysis on methane emission reductions (Chapter 6.5.5 and Annex10). Additional sensitivity analysis on the feasibility of NECD ceilings in case of slower implementation of the renewables and energy efficiency targets was included;

·The link between the Package and ongoing and possible additional initiatives to reduce emissions from international maritime shipping was clarified and reinforced by strengthening the analysis of benefits of designating Emission Control Areas under Marpol Annex VI rules, and by examining possible voluntary offset schemes under the NECD;

·The link with the long-term air quality objectives was strengthened by presenting a feasible trajectory to bridge the interim targets in the medium term with the 2050 targets (Chapter 6.8 and Annex 7.4);

·A thorough update of all figures was made, taking into account the most recent PRIMES 2013 energy projections. Note that this resulted in only minor quantitative modifications and did not change the validity of the previous analysis and conclusions;

·Procedure- and presentation-wise, more precise references to specific sections of the Annexes have been introduced throughout the text.

2.3.Use of Expertise and Consultation of interested parties

The review process drew on expertise built up over several decades of air quality assessments, management and review activities in the EU and internationally. This impact assessment has been prepared on that basis and complemented with several targeted studies prepared by the EEA, JRC, WHO, IIASA, and other leading experts and scientists. Consulted parties included Member State authorities responsible for the implementation of the current policy framework at all administrative levels. Five stakeholder meetings were held between June 2011 and April 2013 to ensure transparency and offer opportunities for stakeholder comments and inputs. All meetings were web-streamed to enable the broadest possible participation. In parallel, two public consultations were organised: a first consultation of competent authorities and other stakeholders at the end of 2011 focused on the evaluation of the strengths and weaknesses of the existing air quality policy framework; the second (and mandatory) on-line public consultation of all stakeholders on the main policy options available to address the remaining air quality problems ran from 10 December 2012 until 4 March 2013 (12 weeks) on the ‘Your voice in Europe’ web page. 1 A Eurobarometer survey seeking the view of the general public on air pollution issues was conducted and reported in 2012. 2 The Commission and the EEA also conducted an Air Implementation Pilot project, bringing together 12 cities from across the EU to assess local experience with implementing the air policy framework. 3

Annex 2 sets out in detail the expertise and analysis used to develop the impact assessment, the procedures for consultation of interested parties, and the feedback from the consultations by main theme. The main messages from the stakeholder consultation are integrated throughout the text.

3.Review of current Policy, Problem definition and Subsidiarity

3.1.The air pollution problem and the policy framework under review

3.1.1.The problem

Air pollution causes substantial environment and health impacts. In 2010, annual premature mortalities amounted to over 400000 and 62% of the EU area was exposed to eutrophication, including 71% of Natura 2000 ecosystems. Total external costs of the health impacts are in the range €330-940bn (depending on whether the low or high range of possible impact valuations is taken). Direct economic damage includes €15bn from lost workdays, €4bn healthcare costs, €3bn crop yield loss and €1bn damage to buildings. Annex 3 provides a summary of the main air pollution impacts, pathways, and sources.

3.1.2.The current policy framework

EU air policy developed from the 1980s 4 , building on national and international efforts at pollution control, in particular the 1979 Convention on Long Range Transboundary Air Pollution (CLRTAP) which developed a multi-pollutant and multi-effect approach to tackle the range of air pollution problems. The policy has been substantially reinforced and consolidated since. The 6th Environment Action Programme (6EAP) adopted in 2002 by the Council and European Parliament established a common EU long-term objective for air quality: to achieve 'levels of air quality that do not give rise to significant negative impacts on and risks to human health and the environment' 5 (confirmed in the new General Union Environment Action Programme to 2020 a.k.a. the "7th EAP" 6 ). It also called on the Commission to establish a Thematic Strategy on Air Pollution that would define the pathway towards achieving this objective through integrated actions in relevant policy areas. Since then, the current EU air policy framework comprises the following main elements:

(i)    The 2005 Thematic Strategy on Air Pollution (TSAP) which sets out the overall policy direction that emerged from the 2000-2004 review of air policy, including interim objectives for 2020 towards the EU's long-term target and cost-effective actions to achieve those objectives while promotes overall policy coherence;

(ii)    The Ambient Air Quality Directives (AAQDs) which set ambient concentrations for a range of parameters to be achieved everywhere in the EU and defines the minimum standards for assessing and managing air quality in the EU Member States;

(iii)    The National Emission Ceilings Directive (NECD) which limits the total emissions from each Member State for a set of pollutants; and

(iv)    A range of measures at EU, national and international level controlling pollution at the source to achieve the objectives set in the above mentioned instruments.

(v)    International action under the CLRTAP and other international platforms, including the exchange of scientific and technical information that continue to provide an important backbone for the EU air policy framework.

These main elements of the framework have been subject to an extensive ex-post review. Annex 4 sets out in detail the procedural issues and the analysis of the relevance, effectiveness, efficiency and coherence of the principal instruments. The main conclusions and follow up options are set out in the next three sections and further taken up in the following chapters.

3.2.Review of the current policy framework

3.2.1.Past reduction of air pollutant emissions and impacts

The current policy framework already allowed to significantly reduce air pollutant emissions and impacts. Figure 1 illustrates the substantial reduction in EU-wide emissions of the main pollutants delivered by policy between 1990 and 2010. In consequence the EU's huge acid rain (acidification) problem has been broadly solved 7 , the impact of lead from vehicle fuels has been eliminated, and the ambient air health risk from other heavy metals and carbon monoxide has been greatly reduced. The health impacts of particulate matter, the main cause of death from air pollution, have been reduced by around 20% between 2000 and 2010 (see Annex 4 chapter 3 for details).

Action leading to these successes has been cost-effective, i.e. largely focusing on the most important sectors contributing to air pollution impacts in accordance with the polluter pays principle. It has stimulated innovation in pollution abatement techniques and radically improved the environmental performance of key production sectors, addressed the increase environmental concerns of consumers, and safeguarded markets without distorting competition or impairing economic growth. 8

Figure 1: EU air pollutant emissions 1990-2010 (EEA, 2012)

Despite the progress, however, the health and environmental impacts of air pollution in the EU remain large. The key outstanding health and environmental problems are set out in section 3.3.

3.2.2.Validity of objectives and scope, and overall coherence

The review has confirmed that the overall structure of air quality policy is logical and coherent. However, a better match must be ensured (in practical implementation) between source controls, ceilings and ambient air quality standards. This is required in particular to ensure that local achievement of ambient air quality standards is not compromised by (a) failure to limit pollution from significant point sources or from products, 9 or (b) high background concentrations resulting from the overall (Member State or transboundary) emission burden. The review examined for each individual policy instrument the extent to which its objectives and scope remain valid:

·For the Thematic Strategy, the underlying analytical framework remains valid for the current review, although some improvements are identified. The impacts identified in 2005 remain the priorities today (with the exception of acidification); an updated review should focus on the scope for further reducing these in the period up to 2030 (beyond which the uncertainties in the analysis become large). It should also focus on greater coherence across the range of policy instruments (including untapped synergies between the AAQD and the NECD). 10

·For the Ambient Air Quality Directives, the health relevance of the pollutants and standards of the original policy has been reviewed by WHO, and confirmed, with the caveat that the level at which certain standards are currently set (mainly for PM) provides only incomplete protection for human health. As compared with 2005 there is additional evidence on the chronic impacts of ozone and NO2, which reinforces the rationale for the respective standards. 11

·The scope and objectives of the NEC Directive are out of line with the latest scientific findings and international agreements. The NECD must be adapted to focus better on health by introducing a ceiling for PM2.5, and on short-lived climate pollutants (black carbon and methane) in line with the 2012 amendment of the Gothenburg Protocol. Objectives must be extended to 2020 to fulfil the Gothenburg requirements, and strengthened for the period 2025-30 to deliver further reductions in background pollution to enable levels of air quality that are closer to those recommended by the WHO and CLRTAP . 12

·For the EU source controls the scope and objectives also remain broadly valid. Updated emissions data and projections confirm that the sectors driving the relevant pollutant emissions were correctly identified. In the short term, the main priority is the full implementation of the existing legislation and in particular the resolution of the real world emissions issue for light duty diesel vehicles. In the longer term the main gaps relate to combustion from small and medium installations, and ammonia emissions from agriculture. 13

·The scope, objectives, and coherence of international action under the CLRTAP remain relevant to co-ordinate action in the northern hemisphere on the key air quality drivers. The recently amended Gothenburg Protocol usefully extended the scope to include action on short-lived climate pollutants (notably black carbon), and flexibility has increased thereby also enabling a broader participation. Further action should focus on facilitating ratification by Eastern European and Central Asian Countries, action on short-lived climate pollutants (including also ozone) and extended exchange of scientific and technical co-operation with other regional groups notably in Asia and North America. 14

3.3.Key outstanding problems 

Based on the above analysis, the following main outstanding problems have been identified.

3.3.1.Health and environmental impacts of air pollution in the EU remain large

Table 1 and Figure 2 summarize the state of play for certain headline air pollution impacts.

Air pollution is the number one environmental cause of death in the EU, responsible for 406,000 premature deaths, ten times more than from road traffic accidents. 16 In addition to premature mortality there are also substantial quality-of-life impacts (well-being and morbidity), ranging from asthma to exacerbation of cardiovascular symptoms. Health-related external costs range between €330 billion and €940 billion per year depending on the valuation methodology. 17 New evidence on the impacts of chronic ozone exposure would add around 5% to this total. 18

These costs include the impact of ill-health on those citizens who experience it, but also the direct cost to the economy. Air pollution causes more than 100 million workdays lost per year across Europe, with an economic damage in the range of €15 billion due to productivity losses. Although a full quantification remains challenging, it is estimated that increased healthcare costs of the order of €4 billion are incurred every year for the treatment of air-pollution-related chronic bronchitis alone, with total costs likely to be substantially higher.

Table 1: Health and ecosystem impacts of air pollution in 2010

For ecosystems the contrast between the broadly solved problem of acid rain and the outstanding problem of eutrophication is clear from Figure 2 . 22 This has substantial biodiversity and also economic impacts (e.g. from damaged fish populations). The eutrophication problem is very widespread but particularly acute in Natura 2000 protected areas, threatening more than three-quarters of sites and so jeopardising the €200-300bn annual benefits from the Natura 2000 network. 23 The tourism sector is affected by the resulting loss of amenity and recreational value of the natural landscape. 

Figure 2: Percentage of ecosystems in each area at risk of acidification (left hand) and eutrophication (right hand)

Further direct economic damage includes damage to the built environment due to acid erosion and soot soiling is estimated at above €500 million annually. (This does not include damage to cultural heritage which is assumed to be substantially higher, but is hard to quantify in the absence of an accurate valuation of the existing stock.) Finally, ozone affects vegetation in addition to its significant health impacts, and the resulting crop productivity loss in the EU is valued at €3 billion per year (source: EMRC 2013).

There are two specific problems related to these substantive impacts, as follows.

3.3.2.EU air quality standards are widely exceeded in densely-populated areas 

Part of the outstanding health and environment problem is due to the lack of compliance with existing EU legislation. Table 2 shows the situation for the AAQD 24 . For the NECD the current rate of compliance with the ceilings is 90%. 25

Table 2: Compliance with AAQD obligations in 2010

Whilst broad compliance has been reached for a number of key pollutants, standards for PM10, NO2, and ozone are widely exceeded throughout Europe ( Figure   3 ). This leaves a substantial part of the EU population and environment exposed to harmful pollution levels. 30 Hence, 17 Member States are currently facing infringement procedures for failing to meet PM limit values, and further action on NO2 and NOx is likely to follow. More detail on the compliance situation with the main legal instruments is given in Section 3.5.2 and Annex 4.

Figure 3: Exceedance of EU air quality standards in 2010 for PM10 (left), NO2 (centre), and Ozone (right) in 2010 (EEA)

In this context it should be noted that, following the 2012 amendment of the Gothenburg Protocol, the NECD is no longer compatible with the EU's international commitments, in particular the new emission reduction objectives established for 2020 32 and the new objective for primary PM emissions. While baseline projections show that the obligations should be met without further measures, 33 formal transposition into the NECD is necessary for ratification, to confirm the EU's commitment to the Gothenburg outcome and to encourage ratification and implementation by other parties. 34

3.3.3.The EU is not on track to meet its long-term air quality objective

Compliance would bring significant health and environmental benefits, but it would not solve the substantial outstanding health and environmental problems beyond 2020, because the standards were set as interim objectives rather than at the low impact levels recommended by the WHO and other scientific bodies. Table 3 below shows current EU standards compared with the WHO 2005 guidelines.

Table 3: Comparison of selected EU Air Quality Standards with WHO 2005 guidelines

Note:    Figures are expressed as concentrations in µg/m3 averaged over one year (with the exception of ozone which is averaged over 8 hours).

Similarly, on the emission side, while the additional reduction commitments agreed in the Gothenburg Protocol will make progress towards the interim objectives of the 2005 TSAP, they will not achieve them. Without further action there will be no further progress towards the EU's long-term objective of no significant adverse impacts on human health and the environment. 35  

3.4.The main underlying drivers or causes of the outstanding problem

The main drivers are summarised below for each problem in turn. 37 They relate partly to the pollution sources themselves, and partly to the failure to manage air quality effectively and efficiently ("governance issues").

3.4.1.Exceedance of EU air quality standards

For the non-compliance issue a short-term perspective is appropriate, i.e. up to 2020, also considering that most existing standards had to be attained in 2010. Two main pollutant-related drivers have been identified.

3.4.1.1.Diesel emissions drive the NO2 and NOx compliance problems

Type-approval emission requirements for motor vehicles have been tightened significantly through the introduction and subsequent revision of Euro standards. While vehicles in general have delivered substantial emission reductions across the range of regulated pollutants, this is not true of NOx emissions from diesel engines (especially light-duty vehicles). While this has been observed for several years, many Member States continue to promote the sale and use of diesel vehicles compared to gasoline and other cleaner fuel vehicles. Sustained high levels of NOx emissions and NO2 concentrations are particularly related to these emissions and the associated AAQD and NECD compliance issues.

The problem is due in part to the poor representativeness of the standardised test cycle used for type approval in the EU 38 and weaknesses of in-service conformity testing. 39 Under the current regime an engine type has to meet the type-approval requirements when tested according to the test cycle, but under normal driving conditions the real emissions can be much higher.

Figure 4 shows that while the NOx emission limit values for diesel passenger cars have been tightened by approximately a factor of 4 from 1993 to 2009 (Euro 1 to Euro 5), the estimated average NOx emissions in real driving conditions have slightly increased. As a side-effect of engine technology developments, the share of direct NO2 emissions in the NOx mixture has increased at the same time, posing additional challenges for the attainment of the NO2 air quality standards.

Figure 4: type approval (left) and real-world emissions (right) from diesel light duty vehicles across Euro standards (source: COPERT analysis and IIASA 40 )

The consequences of the less than hoped for effects of the vehicle standards relating to diesel passenger cars and light-duty vehicles have been exacerbated by national taxation policies favouring diesels and increasing traffic volumes in urban areas (see also governance issues) 41 .

3.4.1.2.Small scale combustion and concentrated local pollution drive the worst PM compliance problems

The zones not in compliance with the PM10 standard fall into two categories. For the first category (around 39% of zones) the margin of exceedance over the limit value is limited, 43 and the exceedances are the compound effect of a wide range of sources, including traffic (notably older diesel engines, both heavy- and light-duty), industrial sources, power production and background concentrations including also secondary aerosols.

The problems in the remaining 6% of zones are more intractable and are driven by two issues in particular: (a) domestic solid fuel combustion, and (b) concentrated local pollution sources, sometimes combined with a particular topography. The domestic solid fuel problem is localised in particular geographical areas (the area at the border between Poland, the Czech and Slovak Republic, and Bulgaria). While EU action on the marketing and use of combustion appliances (under Ecodesign 44 ) will have an impact over time, the replacement rate of those appliances is slow and open fireplaces will not be covered. Member States can tackle the problem directly by restricting solid fuel use, but the areas in question are relatively poor and the socio-economic impact of the restrictions is a deterrent.

Concentrated local pollution sources are a problem mainly in large urban centres which are usually densely-populated, making the resulting health impacts particularly significant. 45 Improved EU source controls will reduce the pollution per unit activity, but the effects of the concentration of activity must be managed by the Member State or region, also to ensure that the economic benefits are not compromised by adverse health impacts.

3.4.1.3.Poor co-ordination between national and local action, and lack of capacity at regional and local level

In addition to the above pollutant-specific drivers, a set of governance-related issues have been identified. Evidence from the Time Extension Notification (TEN) 48 process shows that authorities often acted late in relation to the lead time necessary to bring air pollution down, with many plans and programmes developed only as the compliance deadlines approached and not fully implemented in practice. In many cases responsibility for meeting ambient air quality standards rests at regional and/or local level, but the financial and other tools to meet those responsibilities are often lacking. There have also been insufficient platforms to enable exchange of good practice and co-ordinated action across local areas. A further issue is lack of coordination between the national authorities mainly responsible for the NECD national programmes, and the regional and city authorities responsible for the AAQD action plans, to optimise joint compliance with the two instruments.

The Air Implementation Pilot (box below) confirmed the need to better support local authorities. It also confirmed that part of the reasons for delayed or insufficient action is lack of the assessment and management capacity to develop, implement and monitor plans. (For instance, local authorities have been unable to design effective air quality plans because no adequate inventories of the contributing local sources have ever been developed. 49 The lack of common guidelines for establishing local emission inventories and for undertaking local or regional integrated assessments has hampered comparison and exchange of good practice across local authorities.)

3.4.2.The EU is not on track to meet its long-term air quality objective

Even if compliance with current legislation is reached, major health and environment impacts will remain. Projections show that there will still be 340.000 premature deaths every year due to PM2.5 and ozone, and 55% of EU ecosystems will be affected by eutrophication. For these issues, three further pollution drivers and a further governance issue have been identified. These are particularly relevant for the period beyond 2020.

3.4.2.1.The remaining health impacts from PM and ozone are driven by emissions from a range of sectors

It is not possible to single out a particular sector as the driver of the remaining health impacts. All the main regulated pollutants are precursors of either particulate matter or ozone (or both); and every sector emits one or other of these pollutants. Thus a wide range of sectors must be addressed in order to resolve the problem. Additional effort may be required even of sectors which have been effectively regulated, such as power generation, transport, energy-intensive industries and waste management. But the potential for cost-effective reductions is greater from those sectors whose emissions have reduced less, and which now represent a larger relative share of the problem.

Among these, the emissions of combustion installations below 50MW, non-road mobile machinery 52 (including rail, inland waterway vessels and construction equipment), and the international shipping sector 53 are important. Increased biomass burning in small and medium combustion installations is already causing a worsening of PM (and carcinogenic PaH) emissions, and unless controls are put in place the trend could worsen if biomass uptake is promoted by climate and energy policies. SO2 emissions from maritime transport are set to reduce significantly following the revision of the Directive on sulphur content of marine fuels, 54 but engine-related PM and NOx emissions from vessels will continue to affect air quality levels in the EU unless further action is taken.

Agriculture now contributes substantially to PM concentrations, both through direct particle emissions and through emissions of ammonia which is an important PM precursor. Also, methane emissions from the agricultural sector contribute to ozone.

3.4.2.2.Agricultural ammonia emissions drive the remaining environmental impacts

Agriculture is responsible for 90% of the remaining ammonia emissions and is the primary driver of eutrophication in Europe; through the formation of secondary aerosols, ammonia emissions are also responsible for an increasing share of health impacts due to PM. There is a large untapped potential to achieve significant and cost-effective ammonia reductions (around 30% for 2025), and many of the measures could bring benefits to farmers. 56 Many actions in this area will also have climate co-benefits, by reducing nitrous oxide (N2O), a powerful greenhouse gas.

Until now, there has been little policy action stimulating reduction in ammonia emissions, because the provisions in the NECD have been too weak (most Member States are well below the ceilings, even without additional measures); and because there has been little support within the Common Agricultural Policy for ammonia reduction (as compared with reduction of pollution to water, for instance). The Integrated Pollution Prevention and Control Directive (now integrated in the Industrial Emissions Directive (IED) 57 ) covers about 20% of pig production and 60% of poultry, but excludes cattle and other animals, which are substantial sources of ammonia (as well as PM and methane, see above). The Nitrates Directive 58 covers pollution to air only indirectly. The problem has been largely left to Member States to regulate, and there is large variation in MS controls, ranging from practically nothing to extensive national regulation, with the consequent potential for distortion of competition. Annex 4 section 6.4 provides further details.

3.4.2.3.Sustained background pollution means that local action alone cannot effectively reduce impacts

For PM and ozone, and also for eutrophication, there is a substantial background 60 component to the problem, which is beyond the control of local competent authorities. Part of the background is national and should be addressed at that level. But the transboundary share has also remained high (more than 50% for PM2.5 and more than 60% for nitrogen deposition). 61  

There are several reasons for the persisting background problems. First, there has been limited interaction between authorities responsible for implementing the NECD (and focusing on country-wide measures to meet the ceilings) and local authorities made responsible for meeting AAQD standards. Second, controls on transboundary pollution at EU level are insufficient. There is no emission ceiling for primary PM under the NECD, and for PM precursors (which are regulated) the ceilings are not stringent enough. Moreover, there is limited co-operation between Member States to address transboundary air pollution, even though this is encouraged under the AAQD. 62 Third, air pollution is now understood to travel longer distances and faster than previously assumed. 63 The rise of the global economy, notably the major emerging economies in the northern hemisphere, could therefore be part of the explanation of the persisting high EU background concentrations (notably for ozone), among a range of other factors including climate change and meteorological variability.

3.4.2.4.There remain gaps in the information base for assessing and managing air pollution

In addition to the above pollution-related drivers, additional governance drivers were identified. The first concerns the quality and scope of the emission inventories used for assessing and managing air pollution. National emission inventories are often of limited use for local air quality assessment and management in particular where the relative importance of emission categories differs significantly from the national and local perspective. Historic (national) emission inventories are not always corrected when new and improved emission inventory methods have been applied thus limiting their usefulness for source attribution purposes done by linking measures air quality levels with emission inventories.

A key reason for these deficiencies is the limited inventory review process. There are no provisions under the NECD for a detailed annual inventory review, nor for following through adverse findings by the Commission (and EEA). Also, there is no automatic sanction for addressing incompleteness such as a provision authorising the Commission/EEA to complete any missing submissions for particular sectors or regions. Active engagement with Member States would be needed to develop solutions based also on better capacity building, and technical assistance programmes.

The second issue is the lack of systematic monitoring in the EU of the ecosystem impacts of air pollution. This is necessary for more effective assessment of the impacts of pollution reduction measures on the environment, and to fulfil the EU's international obligations under the CLRTAP.

The capacity to assess the local drivers of air quality and to closely monitor the air quality impacts also on ecosystems will become increasingly important as the most obvious problems are addressed, and greater precision becomes necessary to ensure further cost-effective policy design.

3.5.How will the problem evolve?

This section sets out the projected development of the main problems defined in section 3.2, including the impacts of air pollution on human health and on the environment and compliance with the current air quality legislation. 66 The projections are established by developing a baseline scenario based on the recent energy projections used as a reference for climate, energy, and transport policy analysis. 67 (The data presented in this section is further referenced as the baseline or "no policy change" option in chapters 5 and 6.) The focus is on the pollutant-specific drivers identified above because the governance specific drivers are expected to remain unchanged unless further action is developed.

3.5.1.Future trends in air pollution impacts

Table 4 shows the headline human health and ecosystem damage indicators projected up to 2030 and with extrapolated estimates for the period up to 2050 (although the latter remains highly uncertain).

On business as usual the impacts of air pollution will continue to reduce until about 2020, but progress will slow substantially thereafter. Current human health impacts will reduce by only around a quarter towards 2030, and only minor improvements are expected for eutrophication (with more than half of the EU ecosystem area exceeding the critical load).

Estimated external costs associated with air pollution remain substantial as shown in Table 5 . The range of €332-945 billion estimated for 2010 would reduce to €217-753 billion in 2030.

Table 4: Estimated reduction of headline human health and environmental impacts for the period up to 2050 assuming current legislation (EU28) [Source; IIASA 2013]

Table 5: External costs associated with air pollution in the EU28 for the period up to 2030 (EU28), € billion

The extrapolated figures for 2050 suggest that there is now some prospect for meeting the long-term objective in the 2050 timeframe. This could be realised by a combination of technical abatement stemming from air policy, and future structural changes that should be driven by the transition towards a low carbon economy. 70 This achievement will continue to require a trajectory for reducing impacts in successive stages in the period up to 2050 with a focus on the period up to 2030 (with important milestones in 2020 and 2025) because of the increasing uncertainty of analysis beyond that period. For that reason also, external costs have not been calculated for the period beyond 2030.

3.5.2.Compliance prospects under the current legislation scenario 

As discussed in section 3.4.1, the main compliance problems of immediate concern relate to the legally binding limit values for PM10 and NO2 contained in the AAQD. The results for PM10 and NO2 are shown in Figure 5 below.

Figure 5: Statistical analysis of non-compliance situation in the EU for PM10 and NO2

For PM, the baseline would reduce the percentage of zones substantially above the PM10 limit value (LV) from 12% in 2010 to 6% in 2020, with a further 19% of zones in the vicinity of the LV (Figure 5). For PM2,5 there is no compliance issue. 71

The improved compliance prospects are the result of several factors. The first is the introduction of diesel particulate filters from 2009 onwards, driver by the Euro 5 requirements (Euro VI for heavy duty vehicles) on PM and particle numbers. The results are increasingly substantial as the fleet turns over towards 2020. The second is the development of robust pollution controls on industrial installations, notably in the power sector and some of the most polluting manufacturing industries. 72 Those and other controls will keep reducing PM emissions and concentrations substantially in the period up to 2020, and as a consequence, implementation of current legislation is expected to resolve most of the current compliance problems by then.

However, as highlighted in section 3.4.1.2, specific localised problems will remain for around 6% of the zones. These relate to (a) domestic solid fuel combustion, and (b) particularly concentrated local pollution sources, sometimes combined with a particular topography. The location of these residual problems (see Figure 6 ) nevertheless suggests substantial remaining population exposure.

Domestic (household) solid fuel combustion has historically been a major PM driver in many Member States, and most have restricted solid fuel use in response. For the areas where it remains the major pollution source (notably the border region of PL, SK, CZ, and BG) the required action has not been taken, but pioneering initiatives have been launched in a few locations, for instance Krakow. 73 The problem is not only continuing coal use, but also increase in biomass use, driven partly by renewables policy and (more recently) by the economic crisis. 

Figure 6: Compliance with PM10 limit values in 2010 vs. 2020 projections (by zone)

Concentrated local pollution sources are a problem mainly in large urban centres. The problem is compounded in certain locations by a topography which limits effective dispersion of pollution, a factor which was explicitly recognised in Directive 2008/50, which allowed site specific dispersion characteristics as justification for delayed compliance. Reaching compliance in such 'difficult' locations requires further action on the relevant local pollution sources, to ensure that the economic benefits of the concentrated economic activity are not compromised by adverse health impacts. 74

For NO2, the number of zones well above the standards would reduce from 21% in 2010 to about 8% in 2020, with a further 13% of zones registering levels in the vicinity of the LV. As shown in Figure 6 , the timing of improved compliance prospects is somewhat delayed compared to the PM case but then improves much faster. That is because the NO2 compliance is mainly driven by the forthcoming introduction of the Euro 6 standard foreseen in 2014, and the correction of the "real world emission" problem seen for previous vintages of light-duty diesel vehicles by 2017 at the latest. 75  

As with PM, the remaining problem areas for NO2 ( Figure 7 below) are often densely-populated, and the population exposure implications could be significant.

Figure 7: Compliance with the NO2 limit value in 2010 vs. 2020 (by zone)

For the NEC Directive, the main compliance problem concerns the NOx ceilings, where the environmental performance of diesel vehicles is again a major factor. All Member States currently in exceedance are projected to comply with the NOx ceilings under the baseline scenario by 2020, assuming the timely entry into force of the Euro-6 standard ( Table 6 ). 76 The effect of a hypothetical failure of the Euro 6 standards is shown in section 3.5.3. 77  

Table 6 Projected Member States' compliance with the NECD ceiling for NOx assuming no change to current policy (kiloton/year; IIASA baseline projections, April 2013) (FU, fuels used emissions estimated from GAINS)

Note: Member States already in compliance are not shown. Footnote 1: IE reported in 2012 its NOx emissions for 2011 to be 68 kt (i.e. 3 kton above its ceiling) and likely to comply before 2015.

It is noted in this context that 6 Member States have so far failed to ratify the current Gothenburg Protocol despite several actions taken from the European Commission. Based on the compliance prospects shown above, this situation should be addressed at the earliest opportunity also to safeguard the EU's standing as a credible international partner.

3.5.3.Uncertainties and risks associated with baseline projections

As for any projection, the baseline contains a number of assumptions that are subject to uncertainties. Annex 5 describes the key assumption in further detail whilst sensitivity analysis is developed both in Annex 5 (for the baseline) and Annex 6 (for policy scenarios).

There is however a need to highlight a specific risk. The baseline assumes that introduction of Euro 6 standards for light duty (diesel) vehicles will be accompanied from 2017 onwards by a new test procedure and further enhanced in-use compliance provisions to ensure that real world emissions are aligned with the EURO limit values. 78 This will deliver a step change in the emissions of diesel light duty vehicles compared to the previous standards up until Euro 5. This is a key factor contributing to the significantly improved level of compliance with the NO2 limit values discussed in Section 3.5.2. Figure 8 shows that in case of poor implementation, , e.g. if Euro 6 diesel vehicles again performed equivalent to Euro 4 in terms of Real Driving Emissions (RDE), the projected non-compliance in 2020 would triple. 79 Possible options to mitigate this risk are discussed in Chapter 5.

Figure 8: Baseline projected compliance with NO2 standards in case Euro 6 would not correct the real world emission problems

Analysis for the NECD shows that in case Euro 6 does not deliver, two Member States 80 will still be above their 2010 NECD ceilings in 2020. To manage this risk associated with the base case emissions from euro-6 diesel light-duty vehicles, additional monitoring provisions are needed, as described in Chapter 9.

3.6.Who is affected and how?

The remaining air pollution problem impacts many aspects of the EU. Impacts are summarized in section 3.3.1. Below is a summary of the main actors affected and in what way. Details are provided in Annexes 4 and 5.

EU citizens: Many citizens will remain exposed to damaging levels of air pollution in 2020 and beyond. In addition to the mortality impacts listed in section 3.3, there is a range of ill-health (morbidity) impacts which include asthma, lower respiratory symptoms (LRS), heart problems and chronic bronchitis. These are of particular concern to certain sensitive groups, notably the youngest and elderly citizens and those already suffering from weak health.

The healthcare sector: Poor health due to exposure to air pollution results in increased healthcare costs. Costs incurred every year in the EU for the treatment of air pollution related diseases are substantial and ultimately passed on to the citizens, to employers, and to the public sector.

Ecosystems: EU ecosystems will continue to endure substantial damage in 2020. Although acidification will be broadly resolved, more than 60% of EU ecosystems will remain at risk of biodiversity loss due to excess nitrogen deposition. Ozone pollution is adding to the pressure whilst also generating substantial material and economic losses as indicated below.

Economic operators: In addition to the high external costs borne by society at large, there are important costs directly impacting Farmers through significantly reduced crop yields, the tourism sector which affected by the loss of amenity and recreational value of the natural landscape, public and private economic undertakings that suffer from productivity losses due to air pollution induced workdays lost, and finally property owners that suffer damage to the built environment due to acid erosion and soot soiling.

Member States: Ultimately, Member States are bearing the consequences, not also because of having to incur a large part of the costs associated with air pollution referred to above, but also the possible consequences of the poor state of implementation. Seventeen Member States struggle to comply with AQ legislation, drawing substantial resources from competent authorities and facing the risk of financial penalties. The Member States are also affected by the lack of coherence between commitments under the Gothenburg Protocol and the NECD, as the ensuing regulatory uncertainty adds to the risks of not meeting environmental objectives.

3.7.Justification of EU action

The justification for legislative EU action on air pollution has long been established based on the transboundary nature of air pollution. The legal basis for action is Article 192(1) of the Treaty. The present EU air quality policy focuses mainly on the transboundary aspect of air pollution and related controls that facilitate Member States' actions to meet commonly agreed health and environment standards related to air quality. It incorporates the subsidiarity principle to a very large extent. Both the NECD and the AAQDs define commonly agreed targets, while leaving choice of the means to the Member States. EU enforcement is mainly focusing on whether the targets are reach rather than judging on the means to achieve them.

3.7.1.Why can the objectives not be achieved sufficiently by the Member States?

Action at EU level continues to be necessary because:

·The transboundary component of air pollution continues to be significant. A Member State's emissions are not just its own problem but affect also its neighbours. To decide how far one Member State must reduce pollution so as to protect another, common environmental objectives must be agreed, and these can only be set at EU level. 82 To be operational in controlling transboundary pollution, the objectives must normally be translated into emission reduction obligations per Member State (i.e. caps on national emissions, as in the NECD and Gothenburg Protocol).

·Many of the sources which must be regulated to meet these emission reduction obligations are products that are subject to the rules on the functioning of the internal market. Some of the main examples are diesel vehicles, non-road mobile machinery, domestic solid fuel boilers, paints and varnishes, and fertilisers.

3.7.2.Can objectives be better achieved by action by the Community?

Action at EU level is not strictly necessary to regulate the remaining (non-product) sources, which can in principle be regulated at Member State level. Evaluation of the emission reductions achieved under the NECD showed, however, that best compliance was achieved where a substantial proportion of emissions was regulated by EU source legislation (e.g. for SO2 as described in Annex 4). Effective co-ordination between national and regional or local levels, and between measures to achieve the NEC ceilings and measures to achieve the AAQD limit values, is for the Member States to ensure. The EU can formulate the relevant provisions to maximise coherence, and support relevant capacity-building and information exchange.

To identify whether it is proportionate to adopt source legislation at EU level a detailed analysis of those sectors from which substantial emission reductions would be required. The key issue is what effect the adoption of harmonised standards on a given sector would have on meeting the overall objectives established for air policy. In broad terms, the higher the cost increase from EU harmonisation, the less proportionate the measure (because the same emission reduction can be achieved more cheaply by other means). If the cost increase is relatively small, the benefits of a level playing field, regulatory effectiveness and administrative efficiency would justify EU controls. This analysis is presented in detail in Annex 4 for the present policy and in Chapter 6 and Annex 8 for future policy options.

4.Objectives

4.1.The long-term strategic objective 

The long-term objective of the 6th and 7th EAP – to attain air quality levels that do not give rise to significant negative impacts, on or risks for, human health and the environment – remains valid also for the current strategic exercise. 

It has been operationalized through the TSAP adopted in 2005 as called for by the 6th EAP. Although there is now an improved prospect of meeting the long-term objective for some headline indicators (see Chapter 3.5.1), the policy analysis focuses on the period up to 2030 (with important milestones in 2020 and 2025) whilst ensuring coherence with other relevant initiatives developed along the same time horizon, notably in the field of climate, energy, and transport.

4.2.General objectives relating to updating the present strategy

Two general objectives have been formulated based on the assessment of the present EU air quality policy framework and the outstanding problems and drivers identified during the ex-post evaluation described in Annex 4 and summarized in Chapter 3.

4.2.1.Ensure compliance with present air quality policies, and coherence with international commitments, by 2020 at the latest

The first general objective for the present review is to achieve compliance with the present air quality policy framework as soon as possible, thereby safeguarding at least a minimum level of protection for the EU citizens and the environment in the short term, i.e. 2020 at the latest. This objective includes the need to ensure coherence between the EU and international policy framework, notably the recently amended Gothenburg Protocol.

4.2.2.Achieve substantial further reduction in health and environmental impacts in the period up to 2030

The second priority is to make further progress in reducing air pollution impacts, i.e. to move EU air quality levels closer to the levels recommended by the WHO and other international bodies. The interim health and environmental impact reduction objectives set out in the 2005 TSAP should be updated in accordance with scientific and technical progress while extending the policy horizon to 2030.

4.0.Specific objectives

Measures to achieve the interim objectives should be identified, both at EU and national level, responding to the problem drivers identified in chapter 3. Pursuing the general objectives will require acting on the following specific objectives.

Specific objectives relating mainly to the period up to 2020:

·Ensure full implementation of current legislation and ensure that "real world emissions" of light duty vehicles are brought in line with regulatory requirements (i.e. that limit values are met under normal driving conditions). This is a matter of effective delivery of the baseline: the failure to effectively control NOx emissions from light-duty diesel vehicles has contributed substantially to current air quality compliance problems and should be rectified as a priority. In addition, options for action on existing vehicles should also be examined.

·Facilitate action on residual local compliance problems: Examine options to address the pollutant related drivers of outstanding non-compliance, principally transport and domestic combustion of solid fuels.

·Promote enhanced policy co-ordination at Member State and regional/local level: In the short term (2020) address deficiencies in capacity to assess and manage air quality, and weaknesses in co-ordinating the implementation of the AAQD and the NECD.

·Incorporate Gothenburg Protocol obligations into EU legislation and ratify the protocol: Ensure that the NECD is revised to as to ensure that the emission reduction obligations by 2020 are incorporated, and on that basis propose ratification of the Gothenburg amendment.

Specific objectives to achieve substantial further impact reduction in the period up to 2030:

·Proportionately tap the pollution reduction potential of contributing sectors, in particular those that in the past have not or insufficiently reduced their emissions, by identifying the most cost-effective policy options available for the main contributing sectors.

·Address background pollution: Achieve quantified reduction of national and transboundary background pollution within the EU, and reduce as far as possible transboundary pollution from outside the EU.

·Improve the information base for assessing policy implementation and effectiveness: At EU level, align reporting of emissions with international requirements and fill gaps in the monitoring framework, notably for ecosystem monitoring.

Quantified operational objectives are determined as part of the policy options in Chapter 6 and are therefore not predetermined at this stage.

4.1.Coherence with other policies 

The objectives of this initiative are consistent with and reinforce the Europe 2020 objectives on smart, inclusive, and sustainable growth. They should stimulate innovation that will help support green growth and maintain the competitiveness of the European economy whilst assisting the transition to a low carbon economy, protecting Europe's natural capital and capitalising on Europe's leadership in developing new green technologies. 83  Simplification and clarification of existing policy to enable better implementation is pursued where possible in the spirit of smarter regulation. 84 Where measures are introduced, care is taken to safeguard the interests of SMEs along the "think small first" principle. 85

The need to deliver coherence and optimise synergies with other policy areas applies notably to transport, industrial, agriculture and climate change policy; in particular, targets will be set so as to avoid regret investments vis á vis the new climate and energy policy framework for the 2030 time horizon that is part of the Commission work programme for 2013. This is especially important since air pollution and climate change mitigation policies often address the same pollutants and emission sources. A summary of how coherence has been addressed is provided in Chapter 8.

4.2.Organisation of the remainder of the impact assessment

The policy analysis has two time perspectives: the period up to 2020 for the first general objective, to ensure compliance with existing legislation and international obligations; and the period up to 2030 for the second general objective, to further reduce the remaining environment and health impacts. For simplicity these two issues are taken successively in the remainder of the document although the policy options are closely related. Chapter 5 sets out the options, impact analysis and comparison for the 2020 timeframe, and Chapter 6 does the same for the post-2020 period. Chapter 7 further details the impact analysis for the new source control instruments under consideration, on medium-scale combustion plants. Chapter 8 sets out the package of measures supported by the analysis and summarises the interactions with other policies.

5.Achieving the compliance objective by 2020 at the latest

Chapter 4 set out two general objectives for further developing the present air quality policy framework. This Chapter addresses the policy options identified for achieving the first objective, i.e. to achieve full compliance with the existing air quality policy framework not later than 2020 including with the EU's international obligations. The options were developed drawing from the ex-post review documented in Annex 4 and summarized in Chapters 3.2 and 3.3 as well as the compliance outlook summarized in Chapter 3.4 and Annex 5, and consulted on with stakeholders. 86

It should be noted that the binding obligations contained in the AAQD and NECD were to be achieved already in 2010 or before. 87 The Commission has already undertaken infringement action to ensure that compliance is achieved as soon as possible.

5.1.Options to achieve compliance with the existing air policy framework

5.1.1.Option 1: No additional EU action 

Under this "baseline" option, no new EU policies are envisaged.  The baseline option is characterized in Table 7 and further summarised below.

Table 7: Option 1 –No new EU regulatory action

On this baseline, the AAQD remains in place unchanged, and the NECD is adapted only to transpose the emission reduction obligations for 2020 in accordance with the new EU obligations agreed in 2012 under the amended Gothenburg Protocol. 90 There are no new EU source control acts adopted specifically aimed at reducing air pollutant emissions for the period up to 2020 beyond initiatives already in the pipeline. Certain implementing acts that will give effect to already agreed legislation are nevertheless adopted as planned and will deliver significant further air pollutant reductions. In this context, the enabling acts under Regulation (EC) 715/2007 to resolve the "real world emissions" (RWE) issue by 2017 at the latest and already planned for adoption by end 2013 are particularly important as stressed in Chapter 3. 91 The RWE implementing provisions will include a requirement to monitor emissions according to the new test procedure in the period before the procedure becomes mandatory for type approval (2014-17). As stressed in Chapter 3, however, any implementation defaults in the RWE area would seriously impair the prospects for attaining the compliance objective. Hence it is important it track progress carefully and for this reason a specific monitoring programme led by the JRC, to supplement the monitoring provisions in the implementing measure itself, is foreseen as described in Chapter 9.

While no new EU initiatives are envisaged, the baseline features continued action at the Member State level to ensure compliance with existing air quality standards as soon as possible. 92 Action is guided by the Member States' plans and programmes submitted in the context of the TEN's and/or infringement proceedings launched by the European Commission.

5.1.2.Options 5A-5E: Further EU action to facilitate compliance with the air quality framework

Chapter 3 summarises the compliance prospects up to 2020 for the main issues identified during the ex-post review (Annex 4), i.e. exceedances of PM and NO2 air quality standards under the AAQD, and of the NOx ceiling under the NECD. It showed that most zones would either be comfortably below the limits or within a range of 5 µg/m3, but for a small number of (densely populated) zones the gap would remain substantially larger. Hence, the further question is what contribution various additional actions possible in the period up to 2020 can make to improve compliance. Five broad categories of options have been identified as shown in Table 8 .

Table 8: Options 5A-E --Further EU Action

Option 5A entails developing, adopting, and implementing additional EU source control measures beyond those already in the pipeline and for sectors that have been identified as contributing significantly to air quality and present non-compliance cases. Bearing in mind the problem analysis summarised in chapter 3, such options would mainly focus on hitherto largely unregulated sectors such as small and medium scale combustion installations and agricultural emissions.

Option 5B comprises a tightening of the NECD beyond the levels agreed as part of the amended Gothenburg Protocol (see above). Several variants could be considered although the most realistic is to set national emission ceilings in accordance with the impact reduction objectives contained in the current TSAP as was envisaged in 2005.

Option 5C comprises a broad range of non-legislative measures at EU level to address the governance deficits summarised in Chapter 3. Such measures are detailed in Annex 6 but would principally comprise:

1.Enhanced capacity building for "local" air quality assessment and management to enable better-targeted and more cost-effective air pollution reduction strategies;

0.Fostering enhanced synergies between local and/or national air quality management and other relevant plans developed and implemented at those administrative levels (e.g. on climate change mitigation, sustainable energy, mobility, and urban development);

1.Broadening the toolbox available to national and local authorities for assessing and managing air pollution, and supporting best practice exchange nationally and across the EU (notably related to urban AQ management);

2.Fostering enhanced public awareness, participation, and support for national and local action on air pollution, including the marketing and sale of "green" products;

Option 5D includes additional EU-sponsored measures to promote air pollution reductions outside the EU aimed inter alia at promoting ratification and implementation of the Gothenburg Protocol in non-EU countries (notably in the Eastern Europe, Caucasus and Central Asia region), and promoting global air quality assessment and management actions (notably for pollutants affecting short-lived climate pollutants that are also relevant for EU air quality).

Option 5E entails relaxing the limit values for PM and NO2 and/or granting a further extension of the associated attainment dates (in addition to the extensions granted in 2008).

5.2.Analysis of impacts    

5.2.1.Method

Policy options for achieving the (first) 2020 compliance objective are analysed against the baseline scenario developed for the entire period under consideration (up to 2030). Compliance assessments use a method developed to simulate compliance with air quality standards at individual measuring stations. 93 Observed concentrations at measuring stations are explained in terms of background emissions (derived from the GAINS model) and local emissions, which depend among other things on the vehicle fleet composition known in the past and projected into the future. 94 The monitoring stations are allocated to zones, so as to estimate the likely percentage and geographical distribution of zones in compliance on the baseline, and on alternative pollution reduction scenarios.

5.2.2.Environmental Impacts 

The compliance outlook for the baseline (Option 1) is summarised in Chapter 3.5 and described in greater detail in Annex 5. Compliance prospects for PM10 and NO2 will significantly improve by 2020 but certain "hot spot" problem areas remain.

There will be a number of marginally-compliant zones (those within 5μg/m3 of the limit value, comprising around 19% of PM10 zones and 13% NO2 zones). The indication from national plans submitted under the Time Extension Notifications 95 and parallel analysis conducted as part of the present review 96 suggests that local action can in general deliver concentration reductions in that range. This is provided that Member States and local authorities continue to put in place measures specific to the local problems and conditions of each air quality management zone. 97 Continuing infringement action provides the necessary legal framework for reaching effective compliance, although support on the observed governance issues would be needed to ensure cost-effective attainment of the compliance objective.

In addition there will be a relatively limited number of remaining areas showing substantial non-compliance for one or other pollutant (6% for PM10 and 8% for NOx). The corresponding population exposure would remain unacceptably high, and so likewise the health impacts (11% and 16% of the EU population live in those zones and thus are potentially exposed to concentrations beyond the present LV). Hence the baseline option would not achieve the general objective, and further action is required in these areas. 98

Beyond the measures already in the pipeline (updating emission standards for non-road machinery and inland waterways, eco-design requirements for heating appliances, and IED), there is limited scope for developing, adopting, and implementing new EU-level source controls (Option 5A) that would substantially assist Member States in resolving the outstanding compliance gaps by 2020. This is mainly because the replacement rate of the durable goods that would be regulated (including heating appliances and medium combustion plants) is too low to produce the required turnover of capital stock by 2020. Moreover, some of the main drivers in certain categories (e.g. open fireplaces in domestic combustion) cannot be effectively regulated at EU level alone. Also, product standards are set so as to be proportionate across the EU, and as such may not be sufficient for some specific localised problems. Thus while such measures would reduce overall concentrations, they would not effectively target the remaining non-compliance issues described above. 99  

National emission ceilings set (in the NECD) to levels which would fully deliver the impact reductions of the 2005 TSAP (Option 5B) would deliver impact reductions beyond the baseline as outlined in Table 9 . Overall impact reductions are significant but would be achieved mainly through national action, given the limited scope for EU source controls to yield effects by 2020. The analysis shows however that that the contribution to resolving the outstanding compliance problems would be minor, i.e. only 1% more air quality zones would be brought into compliance compared to the baseline. Again, this is due to local non-compliance being related to emissions from durable goods, which in the short term are not effectively addressed by tighter ceilings. These impact reductions are compared to the economic effort required to reach them in Section 5.2.3.

Table 9: Impacts in 2020 of tightening emission ceilings to the 2005 TSAP levels (Option 5B) compared to levels in 2005 and the baseline in 2020 (Option 1)

The evaluation showed that additional EU measures supporting Member State compliance efforts (Option 5C) could significantly improve the efficiency and effectiveness of implementation. The Air Implementation Pilot confirmed the potential of such support measures and helped to identify the most important needs.

In areas where poorly performing small-scale solid fuel devices are driving PM non-compliance, an effective solution would be to promote either switching to different heating solutions such as gas or district heating, or the accelerated replacement of obsolete heating appliances. Analysis carried out by IIASA and JRC IPTS 100 shows that scrappage schemes to support the replacement of single house heating appliances by subsidising 20% of the investment costs would be able to reduce the residual non-compliance in 2020 from 6% to about 3%; 101 replacement of single house solid-fuel fired appliances by gas or district heating would largely solve the residual PM10 legal non-compliances, leaving less than 1,5% of zones beyond the compliance threshold. Annex 6 outlines a set of measures which could support the Member States in implementation. Finally, better coordination between national and regional/local measures could also be encouraged by requiring national emission reduction programmes under the NECD to take better into account the local air quality management challenges.

Additional support measures to encourage international action (Option 5D) such as ratification of the Gothenburg Protocol by Eastern European and Central Asian Parties to the CLRTAP, would be a necessary (but insufficient) step to reduce hemispheric pollution affecting EU air quality levels. As for Options 5A and 5B, however, the effects of broadened ratification and enhanced international co-operation will only yield substantial effect in the period beyond 2020.

Considering that the baseline would improve compliance substantially and that the remaining gap can be closed through EU-supported national and local measures, a weakening or postponement of the legal obligations under the AAQD (Option 5E) would be unnecessary and counterproductive.

5.2.3.Economic and Social Impacts

The economic and social impacts of the baseline Option 1 have been analysed in detail as part of the ex-post review of the air quality policy framework (see Annexes 4 and 5). The costs entailed by the implementation of already agreed measures for the period up to 2020 are shown in Table 10 for all sectors. 102 In broad terms, half of the additional costs for the road transport sector are geared towards controlling diesel emissions (PM and NO2) from light duty diesels following the replacement of Euro 3 and Euro 4 vehicles by Euro 5 and Euro 6. The other half relates to heavy duty vehicles following the replacement of the current fleet by Euro V and especially Euro VI, already dominant in 2020. These measures will be crucial to deliver the air quality improvements described in Section 3.4.1. After 2020, relatively few new pollution abatement measures are expected to come on stream on the baseline, explaining the projected stagnation of pollution impact reductions beyond this date. 103

Table 10 represents the costs for reducing pollution from a situation of no mitigation at all, down to the current pollution level.  If there were no mitigation at all EU pollution would be extremely high (comparable to or worse than the extreme pollution levels seen recently in Beijing, for instance), and the ambient concentrations would be at least an order of magnitude higher than at present. The resulting impacts would be several times the current impacts, 104  and so the benefits of reducing those down to the current levels can be estimated at some multiple of the current damage costs of €330-940bn. Thus the benefits hugely outweigh the implementation costs even on the most conservative estimate.

Table 10: Pollution control costs for the baseline (option 1) up to 2020 (EU28, M€)

Considering the short lead time, the potential for entirely new EU source legislation (Option 5A) to support improved compliance by 2020 is at best uncertain (see above). Accordingly, estimating the costs in 2020 associated to such measures has been considered too speculative, and the analysis focused on the time horizon beyond 2020 discussed in Chapter 6.

Implementing Option 5B would require expenditure for pollution control of 933 M€ per year in addition to the baseline costs. Assuming that the most cost-effective emission reduction measures would be taken (at the national level), 105 roughly 60% of the expenditure would be for controlling ammonia in agriculture, 20% in industry, 9% in the domestic and institutional sector (including small and medium combustion), and 6% from the energy sector.

As indicated earlier, the costs at Member State level associated with national and local action are difficult to identify, and cannot be readily compared or extrapolated at EU level. Better uptake and cost-effectiveness of such action could be promoted, however, by enhanced capacity building efforts envisaged in Option 5C using available EU funding under the new LIFE regulation. Around €100 million would cover at least 30% of the non-compliance zones and could be effectively leveraged to provide comprehensive support for the non-compliant areas, by use of twinning and information exchange, and by leveraging additional finance. This leverage could include use of other EU funds (e.g. the Structural Funds) to support specifically targeted measures such as fuel switching. 106 Such supporting actions will not increase the benefits associated with option 1, but rather help realise them.

As for EU support measures, support for international action to combat air pollution (Option 5D) would continue to be funded from existing funds and programmes. Considering available absorption capacity, support costs are unlikely to exceed €10 million for the period to 2020. Additional support could be channelled through the thematic and/or geographic components of the EU's external financing programmes, in response to the needs expressed by eligible EU partner countries. Enhanced exchange of scientific and technical experience with the US and other developed country partners of the EU would be covered by the new Horizon 2020 programmes and would not require incremental expenditure.

Relaxing the AQ standards or the legal dates for their attainment (Option 5E) would not entail any additional expenditure, but would also fail to deliver the benefits of full implementation. A more complete discussion of the economic benefits of improved air quality is taken up in Chapter 6.

5.3.Comparison of options

Table 11 (next page) compares the options to attain the objective of compliance as soon as possible based on qualitative criteria related to the effectiveness, the efficiency and coherence in achieving the specific objectives defined in section 4.3. The ratings applied are: negative (-), no effect (0), low (L), medium (M) and high (H).

Table 11: Comparison of options to promote compliance with the present air quality policy framework as soon as possible

5.4.Conclusions

Baseline measures (Option 1) such as the introduction of the Euro 6 standards for passenger cars are necessary to deliver significant air quality improvements throughout the EU. If fully implemented, they will narrow the compliance gap for PM and NO2 in many areas while delivering substantial health benefits.

The preferred policy option to ensure compliance with air quality policy by 2020 at the latest (i.e. the first general objective set out in chapter 4) is to reinforce the baseline with non-regulatory EU measures to support Member States with resolving the residual problems (Option 5C).

Non-regulatory EU measures will facilitate efforts from Member States and their sub-national authorities, which will retain the main responsibility for resolving the remaining localised compliance problems. For presentational reasons and to emphasize the need for engaging implementing authorities across all policy levels (local, regional, and national), the strengthened measures may be usefully grouped together in a European Clean Air Programme. This could include also appropriate platforms at EU level to facilitate and promote information exchange and mutual assistance in the development and implementation of effective local measures. (See outline in Annex 6.)

Additional EU source controls (Option 5A) and/or tighter NECD reductions than the Gothenburg commitments (Option 5B), would not be well-targeted on resolving the remaining localised compliance problems by 2020 at the latest. Their substantial potential to reduce overall air pollution impacts is considered for the timeframe 2025-30 as investigated in Chapter 6.

Although these options and actions to further reduce the impacts of third countries on EU air quality levels (Option 5D) will only deliver measurable benefits in current hotspots beyond 2020, promoting early action is important in view of the long lead times. Hence, support should also be provided for that purpose in the period up to 2020, including to EECCA states for ratification and implementation of the Gothenburg protocol (inter alia through the thematic and/or geographic components of the EU's external financing programmes). These support measures will also enable further advocacy on global air quality management. The EU's own ratification of the Gothenburg amendment is important to ensure its credibility in this context.

6.Achieving further health and environmental impact reductions up to 2030

To achieve the EU's long-term objective, pollution levels must be brought down to the WHO guideline levels for the protection of human health. 107 The exceedance of critical loads and levels for ecosystems must be eliminated.

This chapter therefore sets out, assesses and compares options in pursuit of the second general objective defined for that purpose in Chapter 4 and related to establishing (a) new strategic impact reduction objectives for the period up to 2030, (b) associated emission reduction targets to meet those objectives, and (c) EU legislation to reach the objectives and share the burden of measures at EU level.

It is noted that the NECD is the general instrument for delivering the required impact and emission reductions whereby Member States retain full flexibility to define the appropriate source controls. The extent to which measures should also be taken at EU level to assist Member States is explored in section 6.6. New source controls that emerge as cost-effective from the analysis presented in this chapter are impact assessed in further detail (in Chapter 7).

It is also noted that options for revising the AAQD itself have been excluded from the review, for two reasons. The first is that it is necessary to ensure compliance with the current standards before considering any tightening (see Chapter 5). The second reason is that the current non-compliance shows that the AAQD is most effective when supported by EU control of emissions, through the NECD or EU source legislation. For that reason the priority is to ensure the required emission reductions, and only then to revise the AAQD.

6.1.Methodology

The analysis is based on a multi-pollutant multi-effect model (GAINS, Greenhouse Gas and Air Pollution Interaction and Synergies) which has a broad scope and captures the important interactions between the various pollutants and impacts. 108

One important caveat is that the GAINS analysis is mainly driven by technical measures available in 2012, with no cost adjustment or other allowance for learning over time. Thus it would not reflect the potential for further structural changes in the energy, transport and agriculture sectors, nor for geographically-targeted local measures. We have aimed to complement with analysis of non-technical measures, but possibilities are limited.

The analytical framework has been substantially improved since the 2005 TSAP. The main new element is the stronger emphasis on economic analysis, in particular a more central role for monetised benefits and costs in the comparison of options, and a detailed calculation of direct benefits, e.g. cost savings for healthcare and increased labour productivity due to better health. Not all benefits can be monetised, however, and the assessment remains broad enough to encompass also those for which a strict monetisation approach is inadequate.

The GAINS analysis was complemented by detailed sectorial analysis to assess the impacts of regulating medium-scale combustion plans, as described in detail in Chapter 7 and Annex 12.

6.2.The policy options

6.2.1.Option 1: No further EU action

This first option is the baseline option of no new measures being taken at EU level beyond the source controls established in current legislation and the NECD ceilings for 2020 (transposed from the Gothenburg Protocol). The baseline option is the same developed in Chapter 5, extended to the period up to 2030.

6.2.2.Options 6A-6E: Additional Technical Reduction Measures 

This second objective involves setting more stringent objectives for further reduction of health and environmental impacts. These sub-options are defined according to:

·The 'Gap closure' percentage –the percentage by which the new objectives would close the gap between the baseline (0%), on the one hand, and the result of applying all technically available abatement measures (100%), on the other. The latter is known as the Maximum Technically Feasible Reduction, or MTFR 109 .) A scenario that would achieve 75% of the benefits possible under MTFR is identified as a 75% gap-closure scenario.

One complication is that the various impacts are expressed in different parameters (years of life lost, premature deaths, exceedance of critical loads etc), and so no single reduction objective will cover all impacts. To make the analysis tractable, the long-term health effects of PM2,5 110 are examined first, in options 6A to 6E of Table 12 . PM2,5 impacts can be monetised and thus more easily compared with the required investments, and also deliver benefit for each of the other impacts. Sensitivity analysis then examines to what extent further objectives for those other impacts are appropriate (section 6.5).

·Cost-effective technical measures to deliver the required gap closure objectives (these measures may be undertaken at the national or EU level). In principle many different possible combinations of measures can deliver the same impact reduction; the difference is the distribution of burden among economic sectors.

·NECD ceilings for 2025 and 2030 for emissions of SO2, NOx, PM2,5, NH3 and NMVOC. These correspond to the emission levels (see Table 13 ) that would result from implementing the selected technical measures and which would deliver the gap closure. So as not to prejudge whether binding ceilings would be set for 2025 or for 2030, the ceilings are presented for both years.

Table 12 : Policy options for the post-2020 period, defined according to health gap closure percentage and least-cost measures in the main sectors

Table 13: Emission reductions by pollutant required by the options for post 2020 - Percentage changes vs 2005.

Option 6E, compliance with the WHO guideline values, is impractical at this time, as even the MTFR would fall short in the period 2025/2030. To achieve it further structural changes would be required which cannot be assumed here, and so this option is not further analysed for the 2030 timescale. For the same reason, emission reductions required to achieve Option 6E are also not presented in Table 13 . In the long term, however, deep structural changes, innovation, technology learning and non-technical actions can set the EU on the path towards no significant air pollution impacts. This issue is taken up in section 6.8.

The other options are analysed for comparison against Option 1 (baseline, current policies). Section 3.4.2 showed that current policies will deliver substantial impact reductions in the period up to 2020, but will flat-line thereafter, with only marginal further reductions in impact.

Annex 9 provides an in-depth characterisation of the cost-effective measures presented in Table 12 and of how they may affect individual sectors for options 6A to 6C. In terms of emission reductions required by the various options, Options 6A and 6B achieve their target mainly by reducing primary PM SO2 and ammonia emissions, while the more ambitious targets of Options 6C and 6D drive deeper cuts in NOx and VOC emissions. The associated emission reductions per Member State are given in Annex 7.

6.3.Impact of options 

6.3.1.Health and environmental impacts 

The baseline health and environmental improvements by 2025 and 2030 (Option 1), and the additional improvements delivered for those years by options 6A-D, are presented in Table 14 . The table focuses on premature mortality from chronic PM and acute ozone effects; the full range of health impacts (mortality and morbidity, see section 3.6) is provided in Annex 7, Appendix 7.2, along with detailed impacts per Member State (Appendix 7.3).

Table 14: Impact indicators for 2025 and 2030 compared to 2005 (EU-28)

In the absence of additional measures (baseline Option 1) air pollution impacts will continue to go down by 2025 and (then slower) by 2030. The range of improvements delivered is very similar in 2025 and 2030. The maximum technical feasible reduction (Option 6D) could yield health impact reductions of around 40% while further reducing eutrophication and acidification by respectively about 80% and 20% compared to the baseline. Option 6C, however, could reduce health impacts from PM2,5 by an additional third over the baseline, from ozone by an additional fifth, while the reduction in eutrophication would be half as big again as on the baseline. Options 6A and 6B would result in impact reductions that are closer to the baseline.

6.3.2.Economic impacts 

The economic analysis identifies the most efficient (least-cost) combination of technical measures to achieve the required gap closure. The more ambitious the objective, the more expensive each incremental reduction becomes (in economic terms, a standard marginal abatement cost curve). The broader economic impacts of the resulting compliance costs are then further analysed with the computable general equilibrium model GEM-E3. 111

6.3.2.1.Direct expenditure to reach compliance

The direct cost of policy is the annualised investments required in different sectors to install pollution abatement equipment, as well as operation and maintenance (O&M) of that equipment. These are presented in Table 15 for the EU, and compared to the baseline costs deriving from implementation of current pollution control legislation (Option 1). 112 Details per Member State are provided in Annex 7.

Table 15: Incremental pollution control expenditure by option (€M/yr, % increase in 2025 and 2030 compared to baseline for EU-28)

Incremental pollution control costs are modest for all but the full gap closure, i.e. maximum technical feasible reduction scenario (Option 6D), which would add over 50% to the baseline compliance costs. Costs increase from a quarter of a per cent over the baseline for a 25% gap closure (Option 6A), to around 5% over the baseline for the 75% gap closure scenario (Options 6C); the MTFR (option 6D) would add around 50% more to the total pollution control expenditure.

6.3.2.2.Affected industries and sectorial impacts

Table 16 and Table 17 show the distribution of additional pollution control expenditure by sector 113 in 2025 and 2030 for the different options and in comparison with the baseline (option 1). Detailed tables documenting how specific economic sectors are affected on the different options are presented in Annex 7 and Annex 9; a brief summary of the main conclusions is presented below.

Table 16: Effort required per SNAP sector in 2025 by option, expressed in M€ and in % increase compared to option 1 (baseline).

Table 17: Effort required per SNAP sector in 2030 by option, expressed in M€ and in % increase compared to option 1 (baseline).

On the baseline, the transport sector bears the largest share (more than 50%), followed by the power sector, the domestic sector 114 , non-road machinery (including non-road transport) and other industries. The varying distributions for options 6A-D reflects the limited further potential in sectors that have been stringently regulated in the past, and the larger potential in those that have not (e.g. agriculture, the domestic sector and solvent applications). 115  

For a 25% gap closure (option 6A), modest additional compliance cost are concentrated in the household sector, agriculture and (to a lesser extent) energy intensive industries; for all sectors the additional effort required is less than or of the order of 0,01% of total output. For the 50% and 75% gap closures (options 6B and 6C), households and agriculture remain prominent, but energy intensive industries progressively contribute more. Option 6C (which delivers 75% of the maximum health benefits) requires additional expenditure of 0,3% of the sectorial output in agriculture, 0,07% for refineries, 0,03% for the power sector and much less for all other industries. The effort required of households is 0,023% of their total consumption, on average ca. €3/year per EU citizen.

Option 6D (MTFR) shows a rather different picture, reflecting the fact that all commercially available technical measures are tapped, irrespective of their cost. Highest additional costs are in the chemicals and consumer goods industries (food, clothing, furniture, etc.), related to relatively expensive VOC abatement measures.

6.3.2.3.Direct economic benefits due to reduced health and environmental impacts: 

Reducing air pollution delivers substantial direct economic benefits which are summarised in Table 18 for 2025 and Table 19 for 2030. More detail is provided in Annex 7:

·Labour productivity gains from reducing the lost working days: Avoided economic loss from improved productivity alone ranges between €0,7bn and almost €3bn. These can offset by more than a factor 2 the direct emission control expenditure on option 6A, fully compensates it on option 6B, and cover about half those on option 6C.

·Savings from reduced damage to the built environment: Benefits due to reduced corrosion and soiling of infrastructure and buildings range between about €53-162M per year in options 6A-6D.

·Savings from reduced crop losses: Ground-level ozone damages plants, hampering the growth of trees as well as food crops. The damage to potato and wheat alone is currently estimated at about €2,6bn per year. 116 Emission reductions can reduce this damage by between €61 and 630M per year (options 6A-D). Timber losses are not included.

·Savings from reduced healthcare costs: These are evaluated where data are available. However, due to the lack of sufficient data for a number of symptoms (including lower respiratory symptoms, restricted activity days and child morbidity), the estimate is not a full account of overall healthcare costs from air pollution. Even so, the benefits delivered by options 6A-D are substantial, ranging between €219 and 886M per year.

Table 18: Direct economic benefits of policy options for 2025 vs baseline

Table 19: Direct economic benefits of policy options for 2030 vs baseline

6.3.2.4.Generalized economic benefits from reduced health-related external costs 

The health benefits described in section 6.3.1 can be translated into economic gain figures based on a well-established literature of contingent valuation used to calculate health-related external costs and changes thereof. Table 20 provides the range of the total benefit estimates compared to the baseline (Option 1). 118 Annex 7 sets out the full detail. For comparison purposes the direct economic impacts benefits calculated in section 6.3.2.3 are also reported.

Table 20: Monetised Air Quality Benefits from reductions in health-related external costs of policy options for 2025 and 2030 vs baseline, in M€/year

Additional action yielding from the respective gap closure options could further reduce the external costs between €15-50 billion/year on Option 6A and €60-200 billion/year on Option 6D. Of these external cost savings, more than €4 billion could be direct economic savings due to improved productivity and reduced healthcare costs, reduced crop damage, and reduced damage to buildings and infrastructure.

6.3.2.5.Broader economic impacts

The direct costs (expenditure to reach compliance) presented in sections 6.3.2.1 and 6.3.2.2 are not to be interpreted as societal costs. This is on the one hand because the investment demand represents an economic opportunity for the manufacturers of (e.g.) abatement technology. But also, the costs of compliance affect production costs and can impact on the competitiveness of the affected sectors, including at the international level. Further analysis therefore assessed 119 :

·Which sectors benefit from expenditure in pollution control (by delivering the investment goods), and which other expenditure would be diminished to keep budget balances;

·Price effects and their consequences for international competitiveness and for consumers.

The effect of the improved labour productivity resulting from air quality improvements also has a macro-economic impact. This was assessed by proportionately adjusting the labour supply for each option, 120 and is presented as the ‘health’ case below. Other direct economic benefits such as improved crop yields, reduced healthcare expenditure, and damage to utilitarian buildings are not included in the macroeconomic analysis, and are to be considered separately. Table 21 presents the results in terms of GDP impact and sectorial output 121 .

Table 21: GDP and sectorial output change in options 6A-C, the effects of health benefits to labour productivity are presented separately as “health” case. Source: GEM-E3, JRC-IPTS

Excluding health effects on labour productivity (which, together with the other direct benefits of table 18, would be equivalent to 0,020% of GDP), the estimated aggregate GDP impact is very small even on Option 6C, at 0,025%. Including those productivity gains turns the GDP impact positive for options 6A and 6B, and fully offsets the direct expenditure effect on GDP for option 6C. This is without considering other direct benefits (healthcare, crop yield, infrastructure impacts); as shown in Table 20 , additional quantifiable direct benefits would amount in option 6C to 1080 M€, equal to 0,007% of GDP, and so option 6C would have an overall small positive effect on GDP.

Several of the sectors which bear additional abatements costs also benefit from increased demand for investment goods for pollution control. These sectors (ferrous and non-ferrous metals, chemicals and the power sector), see a net output increase. The sectors that bear a relatively larger share of the burden are agriculture and the refinery sector; however, impacts in agriculture are partly compensated by higher crop yields due to reduced ground-level ozone ( Table 18 , Table 19 ).

6.3.3.Social impacts 

Table 22 summarises the employment impacts of options 6A to 6C by sector. In all cases the effect is essentially neutral (max 2000 jobs in option 6C, which is within the uncertainty range), even without taking labour productivity gains into consideration. When those are considered there is a net job creation (37-112 thousand jobs). The last row in table 22 reflects the impact on aggregate household consumption. The effect is small and in all cases turns from negative to positive when labour productivity is included.

Table 22: Sectorial employment change in options 6A-C, the effects of health benefits on labour productivity are presented separately as “health” case. Last row shows the net welfare effect. Source: GEM-E3, JRC-IPTS