August 18, 2017

Wind and solar energy subsidies are paying off in the US

Wind and solar energy subsidies are paying off in the US

The US saved between $35 billion and $220 billion between 2007 and 2015 because of avoided deaths, fewer sick days, and climate-change mitigation as a result of renewable energy use, according to new research in Nature Energy.

Fossil fuels produce large amounts of pollutants—like carbon dioxide, sulfur dioxide, nitrogen oxides, and particulate matter—which are responsible for ill-health and negative climate effects. According to the study’s authors, those fossil fuels not burnt because of wind and solar energy helped avoid between 3,000 and 12,700 premature deaths in the US in that time period.

The renewable-energy industry has been criticized for needing to be propped up by government subsidies, but whilst government support undoubtedly helped the technology to mature, the research reveals that it is now providing a decent return on taxpayers’ investment.

According to Dev Millstein of Lawrence Berkeley National Laboratory, one of the study’s authors, “The monetary value of air quality and climate benefits are about equal or more than state and federal financial support to wind and solar industries.”

Additional benefits include the economic growth, new jobs, and technology development that the creation of a new industry spurs. Countries around the world that are still questioning the worth of renewable energy subsidies could gain from conducting similar cost–benefit analyses.

In a forthcoming article for IZA World of Labor, Sefi Roth investigates the effect air pollution has on educational outcomes and human capital formation. Recent empirical evidence implies that air pollution imposes higher costs on society, because it adversely affects scholastic achievement and human capital formation, in addition to human health. Roth finds that “the traditional narrow focus on health outcomes (such as morbidity and mortality) may understate the true cost of pollution.” He feels: “regulators must understand the net welfare gains from improving air quality,” noting that “while the expected health benefits and costs of environmental regulation have been studied extensively, credible estimates regarding the monetized educational benefits associated with improving air quality are extremely scarce.” Furthermore, improving air quality may also improve social mobility, as evidence suggests that air pollution affects educational outcomes unevenly across the income distribution. Roth recommends that policymakers support scientific research on the issue and base their decisions on a fully-fledged cost–benefit analysis, which takes into account these additional factors.

Read more articles on how environmental regulations effect labor markets.

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