Rust Belt could pay for renewables in health benefits alone

Sept 2019—According to this recent MIT study, states like Ohio and Delaware could double the amount of renewable energy they require the utilities provide and the cost would be covered in health benefits alone. Air pollution makes people sick and kills people: heart disease, lung cancer, strokes.

But if those states switch to more renewable energy, air quality will improve. As the pollution rates diminish, so should lung cancer, heart attacks, and strokes among people living there. That, the researchers say, could also reduce the medical bills and lost wages associated with those health effects, which leads to their estimated benefits of $4.7 billion in 2030 if current standards are adopted. This is something that medical researchers call a co-benefit of taking action against climate change.

To get to that $4.7 billion number, researchers focused specifically on states’ current renewable portfolio standards, policies requiring utilities to generate a certain percentage of their electricity from renewable sources. The average goal for those states is now set at 13 percent. But if states in that region up the percentage of renewable energy in their mix to 19.5 percent instead, it would result in $13.5 billion in health benefits in 2030 compared to $5.8 billion in costs. Doubling their renewable usage to about to about 26 percent of their total energy mix would lead to $20 billion in health benefits versus $9 billion in costs to implement. The team used a framework combining economic and air pollution models to arrive at their conclusions.

Organizational boundaries make accounting for these benefits difficult. Utilities aren’t responsible for healthcare. However, if utilities were required to pay for the medical bills and lost wages of people they sickened, things would change. This is an example of an externality: a business pushing costs it creates onto someone else. Change the boundaries and you change the incentives.