Smog in Athens: What Price?

Smog in Athens; image under creative commons license: athensgreece070_F

Smog in Athens; image under creative commons license: athensgreece070_F

What would it be worth to stop Athens polluting its air again like it hasn’t done since the Seventies? Can and should we afford the cost of helping reduce the use of wood-burning stoves? The answer is probably not be what you expect!

Because of the high tax on heating fuel — after all, commodities are easier to tax than people — residents have switched to burning wood to keep warm in the winter. The net effect is that (a) less tax than expected is being collected because less fuel oil is consumed, and (b) more pollutants are emitted, so it is incumbent to ask what would be the “price”, the “societal value” in persuading these Greeks to switch back.

In Germany, data is readily available on the “total societal” cost of a kWh of electricity generated from coal, as determined by the Forum Ökologische Marktwirtschaft. This cost is 15 cents. On the other hand, the cost of production before the cost of CO2 credits is 5.2 cents. So if the total societal impact of coal-power vs. a hypothetical 100% clean coal-power is around 10c/kWh , and coal power has approx 900g/kWh of related CO2 emissions, we can guesstimate that Germany accepts an implicit cost of approx 11 cents per kilogram CO2 emissions, and would spend a similar amount on CO2 reducing measures. We are going to need this fact later. If you think this calculation is a stretch, read on anyway: We could double or halve this number without changing the conclusions. Plus, keep in mind that Germany is on the forefront of the Green revolution. 11 cents per kg CO2 reduction is probably as much as any government is able or willing to spend right now.

For the Greek household, on the other hand, the retail economics are thus: wood: 4c/kWh, heating oil: 13c/kWh, electricity: 12.5c/kWh

Since electricity does have the advantage of no direct heat loss through chimneys, we see that heating oil, thus far the most favored way of heating for Athenian households, is suddenly by far the worst choice. The tax changes have only taken Greeks where peak oil would have taken them at some point anyway, only earlier and rather suddenly.

I estimate the actual consumption of heating energy of a small Greek household is about 6000 kWh per year [1], and since the CO2 emissions for heating oil and wood are 0.27kg/kWh and 0.39 kg/kWh, respectively, we conclude: A Greek household may increase its CO2 emissions by half a ton per year by switching from heating oil to wood.

In Germany at going rates it would be worth EUR 55 in taxpayer money to persuade a wood-burning Greek household to switch back to heating oil. That’s nowhere near enough, as the household saves EUR 480 from the switch.

Thus, even German taxmoney — against my expectations — is better spent on reducing CO2 at home than on persuading Greeks to switch back to heating oil, or even electricity. While spending German tax-money on Greek environmental issues was probably never an option in any case, I find it interesting that it’s not even close to worth it in theory.

Before anyone get upset about all the simplification we made: We have ignored massive other effects, like carbon monoxide, Black Carbon, and respiratory health issues from smoke particles and their associated health costs. [3]

Most of this could be solved by either catalytic wood-burning stoves (which help burn the un-burnt carbon in the smoke), reducing these pollutants by 90%. They cost about $1000 retail in the US for a whole stove. Upgrading an existing appliance, however, although less efficient in terms of reducing pollution, costs $200 or less. This is why, although in practice the non-CO2 pollution problems are very, very serious right now, in principle they could be easily solved with the right political instruments.

In conclusion: We should not even try to get people to switch back. In fact, in some respects, wood is carbon neutral even according to the Carbon Trust. CO2 reductions can be achieved with less money elsewhere, for example by continuing the switch to renewables in electricity generation. For me, this was a most surprising result, but the numbers speak an overwhelming language.

It also seems, however, that catalytic upgrades are worth either a subsidy, or even if they were required by law, the added costs would still make wood the most economic heating source in Greece today. So this should be pursued with appropriate vigor.

To see the seriousness of local, non-CO2 related pollution when you don’t regulate the burning of biomass, you just have to look at Fairbanks, Alaska. It is not a pretty picture.

—–

[1] This is inferred from both talking to Greeks and from various media sources. From this, I estimate the average cost of a Greek household that has not switched to wood to be approx. EUR 800 p.a. for heating oil, equating to 6000 kWh p.a.

[2] The CO2 number are not very sensitive to whether a catalytic converter is installed or not. Only the other pollutant measures (Black Carbon and particulates) are.

[3] Good resources for that are

http://en.wikipedia.org/wiki/Wood-burning_stove

and another example of the issues Athens is facing, is in Fairbanks, Alaska:

http://articles.latimes.com/2013/feb/16/nation/la-na-fairbanks-air-pollution-20130217

Forum Ökologische Marktwirtschaft

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