1. Recognize and respond to external costs of energy production and use.


An important lesson learned is that air pollution damage imposes major economic costs, through premature mortality, increased sickness and lost productivity, as well as through decreased crop yields and ecosystem impacts. Most cost-benefit analyses in the United States show that emission reduction programs provide much greater benefits than their costs (Chapter 3). Emission controls are often less costly to implement than first envisioned. Appropriate programs can lead to economically efficient approaches for improving the environment, reducing costs further. Control costs are not purely costs, as they create opportunities (e.g., manufacturing and sales of pollution control and energy efficient equipment) that result in economic growth. As an example, air pollution control industries in the United States generated $27 billion in revenues and employed 178,000 people in 2001 (Chapter 10).


  1. Both countries need to improve permitting policies and economic mechanisms that reflect the external costs of pollution that are being paid by others (e.g., through adverse health effects and degraded quality of life). These might include the imposition of high enough taxes on emissions to make the addition of controls economically attractive, as well as rebates or subsidies to encourage use of higher efficiency and renewable technologies.

  2. Subsidies must be carefully considered within a broader context, so as to avoid conflicting or divergent purposes. Subsidizing one energy source in the name of energy security can have an impact on other efforts to achieve air quality goals.

  1. Establish and implement standards that protect human health.


Excessive concentrations of SO2, NO2, and Pb have largely been reduced to levels that comply with health standards throughout the United States, but there are still many areas in China where these exceed ambient standards. Fine particulate matter (PM2.5) and ozone (O3) exceed healthful levels in many parts of the United States and China. In terms of premature death, there is roughly a 10 percent increase in adult mortality rates for every 10 µg/m3 of annual-average PM2.5, a 0.25-1 percent increase per 10 µg/m3 24-hour average PM10, and 0.2-0.8

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