Human toll of air pollution could be costing China 13% of GDP

Tackling climate change and improving living standards are compatible, says a new study which highlights economic costs of air pollution to China

Deaths and illness caused by coal-driven air pollution could be costing China as much as 13% of its GDP, according to a wide-ranging international report setting out ways to cut global emissions while improving living standards.

The report, overseen by former Mexican president Felipe Calderón, British economist Nicholas Stern and a host of former heads of state, finance ministers and economists, argues that it is possible for the world both to tackle climate change and get richer and sets out a programme for drastic emissions cuts.

Chinese PM 2.5 pollution was linked to 1.23 million premature deaths in 2010, which in monetary terms is equivalent to between 9.7% and 13.2% of GDP, said the Better Growth, Better Climate report, released today. This makes it by far the biggest sufferer, followed by Russia at around 8% and India at around 6%.

Such figures undermine the argument that coal, the most carbon-intensive of fossil fuels and responsible for 73% of power sector emissions, provides a low-cost option to meet the world’s growing energy demands, says the study. It sets out policies it claims could deliver up to 90% of the emissions reductions needed by 2030 to have a good chance of keeping warming within 2 degrees Celsius.

Switching to natural gas and low-carbon energy sources including renewables, hydropower and nuclear could lead to major improvements in public health at lower costs than often assumed, say the authors. For example, the world needs to cut coal-fired power generation to 60% of 2011 levels by 2030 to stay within 2 degrees warming, according to the International Energy Agency. Achieving half of this reduction could cost nothing, or very little, once the falling price-tag of alternative energy sources, better public health and other benefits are taken into account, suggests the report.

“It is time to shift the ‘burden of proof’, so coal is no longer assumed to be an economically sound choice by default,” say the authors, who call on governments to require assessments showing that the benefits of new coal plants outweigh the costs before giving the go-ahead.

Other recommendations range from phasing out fossil-fuel subsidies and restoring degraded forests to boosting intellectual property protections and forcing investors to conduct climate-risk analysis on their portfolios. Moving from sprawl to dense living and good public transport in the world’s biggest 724 cities could save 1.5 billion tonnes of greenhouse gases per year by 2030, the authors added.

The report is the result of a commission set up last year by seven countries including Colombia, Ethiopia, Norway and South Korea and manned by such figures as Chen Yuan, former chair of the China Development Bank, and Ricardo Lagos, an ex Chilean president.

Its publication comes a week before world leaders convene for a one-day climate change summit in New York and the authors will be hoping their optimistic analysis gains traction with assembled decision-makers, despite the expected absence of Chinese president Xi Jinping and Indian prime minister Narendra Modi.

Speaking at a press briefing, Nicholas Stern played down the significance of Modi and Xi’s decision to miss the meeting, pointing to positive signals from the Indian leader on climate, such as a stated ambition for every household to have solar power. However, he stressed the importance of securing a robust global deal at the UN climate conference in Paris next year: "It is one thing to describe good policies, but it’s another to be credible. That’s why an international agreement is so crucial," he said.