Air quality

In the atmosphere, emissions of sulphur and nitrogen are transformed into acidifying substances such as sulphuric and nitric acid. When these substances reach the ground, acidification of soil, water and buildings occurs which cause severe environmental damage. Nitrogen oxides (NO_x) also contribute to the formation of ground-level ozone (that is effectively and greenhouse gas) and are responsible for eutrophication, reduction in water quality and species richness. They are associated with adverse effects on human health because high concentrations cause respiratory diseases.

Fine particulate matter (PM_2.5), is another serious pollutant globally from a human health perspective. Chronic exposure even to moderate levels of PM_2.5 substantially increases the risk of heart disease and stroke, the leading causes of death in OECD countries. It also increases the risk of respiratory diseases, including lung cancer, chronic obstructive pulmonary disease and respiratory infections. Black carbon, a major component of PM_2.5, accelerates global warming and fosters snowmelt. Emissions from transport, industry, electricity generation, agriculture and domestic (household) sources are the main contributors to outdoor air pollution.

• Emissions can be reduced by substituting dirty fuels for cleaner ones, focusing development on cleaner industries, reducing consumption of polluting products and adopting cleaner technologies. Behavioural and lifestyle changes are also important.

• Policies that provide incentives across a broad spectrum of firms and consumers (e.g. emission or energy taxes) tend to be more cost-efficient than those that target a specific product, fuel or technology (e.g. subsidies for electric cars).

• Both the sources of air pollution and severity of exposure vary across and within countries. Hence it is important to tailor policies to specific local circumstances. For example, more stringent measures are required in densely populated areas or for emission sources located upwind from urban areas. Such spatially heterogeneous policies help achieve environmental objectives at lower costs than measures that apply uniformly to sources in all locations and to populations at all risk levels.

In Europe and North America, acidification has led to several international agreements among which the Convention on Long-Range Transboundary Air Pollution (1979), and its eight protocols to reduce emissions of sulphur (Helsinki 1985, Oslo 1994, Gothenburg 1999), nitrogen oxides (Sofia 1988, Gothenburg 1999), volatile organic compounds (Geneva 1991, Gothenburg 1999), and ammonia (Gothenburg 1999). The 2012 amendment of the Gothenburg protocol establishes legally binding emissions reduction commitments for 2020 and beyond for the major air pollutants: sulphur dioxide (SO2), nitrogen oxides (NOX), ammonia (NH3), volatile organic compounds (VOCs) and fine Particulate Matter (PM2.5). It specifically includes the short-lived climate pollutant black carbon (or soot) as a component of particular matter. Reducing particulate matter through the implementation of the Protocol is thus a major step in reducing air pollution, while at the same time facilitating climate co-benefits. Two other protocols aim at reducing emissions of heavy metals (Aarhus 1998) and persistent organic pollutants (Aarhus 1998).

Progress can be assessed by measuring the evolution of emissions, the exposure of population to air pollutants, the related health effects and their costs, and the evolution of policy stringency directed at pricing air pollution. The costs of air pollution mainly arise from its detrimental impact on human health. These take the form of shorter life expectancy, increased healthcare costs and reduced labour productivity. Further consequences include reduced agricultural output and damage to ecosystems and built structures.

Compared to 2000, SO_x emissions have continued to decrease for the OECD as a whole as a combined result of changes in energy demand through energy savings and fuel substitution, pollution control policies and technical progress.

NO_x emissions have also decreased in the OECD overall since 2000, but less than SO_x emissions. This was mainly due to changes in energy demand, pollution control policies and technical progress. In the late 2000s, the slowdown in economic activity following the 2008 economic crisis further contributed to reduce emissions. However, these results have not compensated in all countries for steady growth in road traffic, fossil fuel use and other activities generating NO_x.

The majority of OECD countries reached their SO_x and NO_x emission targets set for 2020. In a few countries reaching NO_x emission targets remains a challenge.

Emission intensities per capita and per unit of GDP show significant variations among OECD countries. Almost all OECD countries have achieved a strong decoupling from economic growth since 2000. High levels and rise of NO_x emissions in Australia are due to industrial combustion, power stations and growing vehicle ownership.

For further details see the metadata in the source databases listed under Sources below.

Premature deaths attributed to PM_2.5 exposure have consistently increased worldwide however they have decreased across the OECD. Among OECD members, Czech Republic, Greece, Hungary, Latvia, Poland, and Slovak Republic have the most attributed deaths relative to population, with more than 500 per million inhabitants each year.

In OECD countries, associated welfare costs of premature deaths due to PM_2.5 pollution, represent on average about 2.4% of GDP equivalent (compared to about 5.8% worldwide). They have decreased in almost all OECD countries while they have increased in the rest of the world. The welfare costs associated with PM_2.5 pollution are higher in Europe than in other OECD regions.

Exposure indicators provide only a partial view of air pollution severity and consequences aggregated across the entire population. Importantly, there is generally no “safe level” of exposure for many pollutants. Even where guideline or target exposures are met, substantial public health and economic benefits can be realised through further improvements in air quality. Better estimates are needed for exposure to both outdoor and indoor air pollution. Particular attention should be paid to exposure of sensitive groups and quantitative impact on human health (and associated distributional and equity issues). Although many important gaps remain, available data are improving.

For further details see the metadata in the source databases listed under Sources below.

Overall, the share of environmentally related tax revenue (ERTR) continues to decline in OECD countries, amounting to 4.6% of total tax revenue in 2021, down from 5.9% in early 2000s. Compared to GDP, ERTR is also decreasing and reached 1.5% of GDP in 2019, compared to 1.8% in the early 2000s. The decreasing trend is a combination of factors, namely, that tax rates are typically defined in physical units (e.g. per litre) and hence are set in nominal terms. Without inflation adjustment, these rates decrease in real terms over time. While countries such as Denmark, the Netherlands and Sweden have implemented such adjustments, most OECD countries do not yet apply inflation adjustments to environmentally related taxes. Another factor contributing to this trend is the increase in crude oil prices up until mid-2014, which triggered substitution away from motor fuel use, also making adjustments in nominal tax rates on motor fuels politically difficult. Yet some countries, such as Slovenia, Costa Rica, Turkey and Estonia strengthened the role of environmentally related taxes and have tripled their share of tax revenue since 2000.

Comparisons of ERTRs in OECD countries provide a useful starting point for analysing the impact of environmental taxation, however, comparing only the levels of revenue does not provide the full picture of a country’s environmental policy, as it does not provide information on the levels of tax rates or the exemptions applied. Other parts of the OECD PINE database, including information on tax rates and exemptions, allows deeper assessment of the environmental impacts of these taxes. In addition, governments may choose to implement environmental policy using a range of other instruments, including fees and charges, expenditures (both direct and subsidies) and regulation, some of which are also detailed in the PINE database (see http://oe.cd/pine for information on the use of alternative instruments in countries).

For further details see the metadata in the source databases listed under Data sources below.