The SEG and Impact Assessment Steering Group (comprising concerned DGs) were consulted on the focus of the individual studies and the terms of reference. Reports (including interim drafts) were published on CIRCABC and final reports on the review website. A draft review of the existing policy framework, and draft problem identification, was presented to Member States on 24 October 2012. A revised draft was published as background to the second public consultation on 7 December 2012. The outcome of the fact-finding and consultation processes has been used as the basis for drafting this annex and the relevant parts of Chapter 3 and for each main conclusion a reference is provided to the relevant substantiating documentation.

Member States were consulted on the draft evaluation conclusions and problem definition in October 2012, and the draft was presented to the 4th Stakeholder Expert Group in December 2012 and published as background to the second public consultation (on policy options). The minutes of the 4th Stakeholder Expert Group confirm the SEG's support for the review and problem identification presented. A follow-up Member State expert group in February 2013 was consulted on possible options for resolution of the governance issues identified, including options for better co-operation between authorities responsible for implementation. This meeting brought together for the first time representatives from the Member State Competent Authorities' responsible for the implementation of the AAQD and the NECD and was instrumental in encouraging the two communities to see the AAQD and NECD as complementary rather than separate instruments. Finally, the issue of air pollution was taken up by the Irish Presidency as the subject of the informal Environment Council discussion on 22 April 2013, including a preceding seminar.

The national authorities responsible for implementation and enforcement of the TSAP have been involved extensively and at all levels (national, regional and local). For the initial evaluation questionnaire all Member States were consulted; 13 provided very detailed assessments which were a key input for the problem definition. Implementing authorities were also involved in the review through a workshop on particulate matter held on 18-19 June 2012, through a pilot project on implementation of air legislation in urban areas co-organised with the EEA (involving 12 cities), and as reviewers of all the evaluation material in the Stakeholder Expert Group. During the review process, there have also been interactions with regional groups including European city representatives, and the Committee of The Regions subsequently issued an own-initiative opinion setting out its views on the review.

In parallel a fact-finding process was conducted, comprising the launch of a series of additional studies for the review of each key policy instrument - the TSAP, the AAQD, the NECD and the source legislation covering key sectors. Specific questions were identified for each assessment. A list of the questions addressed and the studies launched for each policy instrument is provided in Appendix 1.

The initial public consultation was a free-response questionnaire sent to the SEG on 17 June 2011 with a deadline of 15 September 2011 (later extended to 29 September 2011). The first results were presented to the SEG on 21-22 January 2012 and the final report was published on 29 May 2012.

·The coherence and synergy of EU air pollution policies with other environmental policies (climate change, biodiversity, and noise), sectoral policies (in particular regarding transport, energy, and agriculture), and international policies.

·The coherence and synergy of the EU air pollution policy tools, in particular the air quality directives, the national emission ceilings directive; and the sectoral directives;

·The adequacy of the air quality legislation in relation to the objectives of the 6th EAP;

The review was based on the series of questions set out in the first stakeholder consultation: These questions related to:

An inter-service group was set up for the review on 4 February 2011. The overall framework for the review was presented at the first meeting of 23 February 2011 and formalised in Staff Working Document SEC(2011)342 of 14 March 2011, which announced the establishment of a Stakeholder Expert Group (SEG) and a public consultation evaluating the effectiveness of existing policy. The SEG (also including the relevant Commission services) was established on 6 June 2011 to advise, support, and ensure the quality of the review. The framework for review was presented and endorsed at the first meeting 6-7 June 2011.

This initiative is part of DG ENV's annual evaluation plan for 2013. The evaluation unit of the DG has been involved and has actively overseen the process since the beginning of 2012.

The most detailed review focused on the core elements of the current policy framework: the TSAP, the AAQDs and the NECD. In determining the extent to which these instruments met their objectives, their overall coherence also with other legislation, including the relevant EU source legislation is a key question and is addressed in section 6. However, an assessment of the fitness to its specific purpose, of each element of the source legislation individually, is beyond the scope of this exercise. The legislation in question often has policy objectives over and above the control of emissions to air, and has in many cases recently been subject to separate review of its effectiveness. In other cases, an ex-post analysis is forthcoming for which the present review will serve as a useful benchmark. ,

·International Action. The CLRTAP and its Protocols form an important backbone for EU policy development and implementation. The TSAP pointed up the need to reinforce cooperation to tackle regional and global background pollution and to continue to support the Convention's scientific and monitoring activities (See section 8).

·Source legislation. Whilst the AAQDs and the NECD comprise commonly agreed EU air quality and air emission standards, the Member States are generally considered to be best placed to determine the pollution reduction measures needed to achieve them. Hence, national and local source legislation and non-legislative policies are an essential component of the EU air quality policy framework (See section 7). However, EU source legislation has played an equally important role, e.g. where emissions from products contribute substantially to air pollution problems and such products must be regulated at EU level (e.g. light- and heavy-duty road transport, non-road mobile machinery, etc.). For a range of other pollution sources (typically large stationary sources) the co-legislators have determined also that control of emissions at source at EU level is appropriate (for instance the Directives recently consolidated into the Industrial Emissions Directive 2010/75/EU). EU Source Controls are discussed in section 6; National and local source controls are discussed in section 7.

·The National Emission Ceilings Directive 2001/81/EC (NECD). The NECD was adopted prior to the 2005 TSAP. As the name implies it caps the total amount of emissions of each of four pollutants (SO2, NOx, non-methane VOCs and ammonia) for each Member State, with the caps designed to limit exceedances of acidification and eutrophication critical loads and to limit the formation of ozone so as to protect both health and ecosystems. The 2005 strategy indicated that the Directive should be revised so as to align the emissions ceilings for the relevant pollutants with the strategic health and environmental impact reduction objectives for 2020, but the revision planned for 2008 was not adopted. (See section 5)

·The Ambient Air Quality Directives (AAQD). The original Air Quality Framework Directive 96/62/EC and its four daughter Directives setting ambient air quality standards for a range of pollutants: Directive 1999/30/EC covering SO2, NO2, PM10 and lead, Directive 2000/69/EC covering benzene and carbon monoxide, and Directive 2002/3/EC addressing ozone. These were consolidated into the Ambient Air Quality Directive 2008/50/EC as proposed in the 2005 TSAP, with the addition of a set of controls on PM2.5 and the possibility for an extension of the original deadlines for compliance with the limit values for PM10, NO2 and benzene. It provided for the adoption of consolidated provisions on reporting (adopted as Commission Decision 2011/850/EU) and the consequent repeal of Decision 97/101/EC on Exchange of Information. The 4th Daughter Directive, 2004/107, covering heavy metals and poly-aromatic hydrocarbons (PAHs), was recently adopted at the time Directive 2008/50 was proposed, and thus remained as a separate instrument. (See Chapter 4)

·The Thematic Strategy on Air Pollution (TSAP) adopted in 2005 . Having established that the long-term objectives stated in the 6EAP were not achievable within its time horizon, the strategy set interim objectives for 2020 and outlined strategic priorities and actions to better co-ordinating the various strands of EU policy instruments to achieve them. (See section 3)

The main elements of the air quality policy that were reviewed are:

The present review incorporated a full evaluation of the functioning of the current EU framework for air quality policy in line with the Commission guidelines. This section outlines what was evaluated, as well as the fact-finding and consultation processes. The outcome is presented in sections 3 through 9 as a critical review of the relevance, effectiveness, efficiency, and coherence of the respective components of the policy framework, including a comprehensive analysis of the present compliance problems and the underlying reasons. In detail: sections 3 to 5 focus on the main air policy instruments (the TSAP, the AAQDs and the NECD); sections 6 to 8 evaluates EU and national source controls and international air pollution policy, and section 9 addresses the overall coherence of the various policy elements. Section 10 summarizes the review of the policy framework as a whole and formulates the principal guidance for the review emerging from it. Those key conclusions are taken up in the main body of the Impact Assessment, principally from section 3 onwards.

The EU air policy framework was developed building on national policies developed in Member States at the time and international work in the 1979 Convention on Long Range Transboundary Air Pollution (CLRTAP) which developed a multi-pollutant and multi-effect approach to tackle the range of air pollution problems. The first EU air quality directives and emission controls were established in 1980 and the policy has been substantially reinforced and consolidated since. The 6th Environment Action Programme (6EAP) adopted in 2002 by the Council and European Parliament established a common EU long-term objective for air quality: to achieve 'levels of air quality that do not give rise to significant negative impacts on and risks to human health and the environment'. It also called on the Commission to establish a Thematic Strategy on Air Pollution that would define the pathway towards achieving this objective through integrated actions in relevant policy areas.

The vast majority of ammonia NH3 is produced by agricultural activities through emissions from fertiliser and manure application and storage, and animal housing facilities. For some activities, such as intensive pig rearing and chicken farming, the application of best available technology (BAT) is required through the Industrial Emissions Directive, but many large contributors, in particular cattle farms, are not subject to BAT requirements under EU legislation. Low-emission manure spreading techniques exist but are applied unevenly in different Member States. Overall, NH3 emissions have remained stable in the last decade and are not projected to decrease in the future, in the absence of further measures.

Another large source of SO2 emissions is international shipping, which has traditionally relied on unabated high sulphur content residual fuel oil. Formerly, such emissions have been considered of lower significance because they occur at sea rather than on land, but with the reduction of land-based emissions following the progressive introduction of effective legislation on industrial emissions, maritime SO2 emissions account for a progressively larger share of total emissions.

Sulphur Dioxide (SO2) is emitted by a number of energy intensive industrial processes and power generation. Over the last 20 years SO2 emissions have substantially decreased thanks inter alia to effective implementation of emission controls at source of large combustion installations (regulation for Industrial Emissions) and improved fuel quality with low levels of suphur.

·Methane (CH4) Because of its long atmospheric lifetime, methane plays a much more significant role in the generation of hemispherically-transported O3 than in the locally-produced episodic O3 which has been the focus of control up until now.

·CO, which is the product of incomplete combustion. CO emissions have decreased substantially over the years through the introduction of EURO standards for vehicles (oxidation catalyst) and improvements in residential heating devices.

·NOx, emitted by traffic, especially diesel engines (also from off-road machinery); the power sector and industrial combustion sources, including small-scale combustion installations (SCI); boilers and heating appliances fired by liquid fuels and natural gas; and international transport (air and marine).

·VOCs, emitted by a large range of processes and applications such as energy use and supply systems, road and other transport systems (petrol vapour), industrial and domestic solvent use, agriculture and natural sources (trees and other plants).

Ozone is not directly emitted but is formed in the atmosphere through a number of reactions between ozone precursors. The most important ozone precursors are:

Secondary PM in the form of inorganic aerosols formed in the atmosphere by atmospheric reactions between SOx, NOx and NH3, and organic aerosols formed by reactions involving VOCs and oxidants.

·Open burning of agricultural waste, which is banned in some of the Member States but continues to be widespread practice in others.

·Residential heating, especially related to biomass (wood and pellets), solid fuels (coal, coal briquettes), and certain liquid fuels; these installations and/or products are currently not covered by EU-wide regulation which would limit the emission of PM.

·Off-road vehicles and machinery (which include ships and vessels, aircrafts, construction machinery, diesel trains, tractors, small hand-held engines, etc), which are currently regulated less stringently than road transport.

·Traffic, through the exhaust of diesel vehicles as well as new generation gasoline direct injection (GDI) vehicles. Non-exhaust particles from traffic (tyre and break wear, re-suspension) also contribute especially to the coarse PM fraction. Traffic emissions enter the atmosphere in or close to densely populated areas and thus contribute to population exposure in increased proportion.

Primary PM from combustion sources as well as some non-combustion and also natural processes; sectors and activities of particular importance are:

Observed particulate matter (PM) concentrations in the atmosphere are the sum of a number of components which originate from different sources including primary and secondary sources. The most relevant sources are set out below.

Emissions of air pollutants are closely linked to economic activity through combustion and/or other processes which sustain that activity.

Over the past decades, a substantial scientific knowledge base on the causes and effects of air pollution has been established and validated.

Air pollution and greenhouse emissions often relate to the same sources, hence GHG reduction measures (e.g. on power generation and transport) can deliver substantial reductions also of air pollutants such as SO2 and PM. This is furthermore an increasing shared interest in reducing emissions of the Short-Lived Climate Pollutants. But decarbonisation tends not always towards reducing emissions of PM, one of the air pollutants of highest concern. That is the case for example, where fossil fuel combustion is substituted for biomass burning, often considered climate neutral by convention, yet leads to increased emissions of PM and other carcinogenic substances such as PAHs.

Atmospheric pollution and climate change are both distinct and linked in several ways. Contrary to greenhouse gases (GHG), air pollutants are toxic and create direct impacts on health and the environment. GHG generally have long lifetimes in the atmosphere, with about 12 years for CH4 and about 100 years for CO2. Classical air pollutant like SO2, PM and NOx have lifetimes of a few week to months As some of the classical air pollutants also have an effect on climate these are termed Short-Lived Climate Pollutants, i.e. substances that affect both air quality and the climate.

High levels of O3 also damage plants, impairing reproduction and growth, leading to reduced agricultural crop yields, decreased forest growth and reduced biodiversity. Ozone decreases photosynthesis, thereby reducing also plant uptake of carbon dioxide (EEA, 2010a). Ozone also increases the rate of degradation of buildings and physical cultural heritage. Even low concentrations of ozone in air are very destructive to organic materials such as latex, plastics, and lungs. Ozone is also a short-lived climate pollutant (see below).

Ozone has a marked effect on human health. High levels cause breathing problems, trigger asthma, reduce lung function and cause lung diseases (WHO, 2008). Short-term exposure by current O3 concentrations in Europe have adverse health effects, especially in the summer, on pulmonary function, lung inflammation, lung permeability, respiratory symptoms, increased medication usage, morbidity and mortality. Several European studies have reported that acute mortality rises with increases with ozone exposure (WHO, 2008). Epidemiological health evidence of chronic effects from exposure to ozone is now emerging indicating considerably larger mortality effects than from acute exposure alone (WHO, 2013).

Ozone (O3) in the lower atmosphere (ground-level ozone) is an air pollutant with harmful effects on the respiratory systems of humans and animals as well causing significant environmental damage, including the "burning" (necrosis) of sensitive plants and the corrosion of materials and buildings. Ozone is not directly emitted into the atmosphere but formed from a chain of chemical reactions following emissions of precursor gases including NOX, methane (CH4) and non-methane volatile organic compounds (NMVOC), and carbon monoxide (CO). The atmospheric lifetime of ozone is about 22 days in the atmosphere which means that it travels across continents and to be considered a global pollutant. Its main removal mechanism is deposition to the ground, and particular through the uptake by plants. There is also a global atmospheric background concentration of ozone (tropospheric ozone), partly resulting from photochemical ozone formation globally and partly from the downward transport of stratospheric ozone to the troposphere.

Several measures are known to control eutrophication. In addition to controlling air pollution induced pressures, mitigation methods can include measure to control runoffs from feedlots, planting vegetation along streambeds to slow erosion and absorb nutrients, controlling application amount and timing of fertilizer.

Sources of these nutrients include animal wastes, agricultural runoff, sewage municipal water and nitrogen deposition from the air. The ecosystem quickly experiences an increase in algae and other simple plants, as these organisms thrive in the presence of the added nutrients. An algae bloom occurs as the algae accumulates into dense, visible patches near the surface of the water, prohibiting light from penetrating deeper areas of lake or stream. Other plants species are unable to survive without this light, and may become extinct. An even more serious problem arises when the algae begin to die and sediment to the floor of the rivers and lakes. At this point, oxygen-demanding bacteria take over the ecosystem, decomposing the organic material of the dead algae and using up dissolved oxygen in the process. This lower concentration or in severe cases complete lack of oxygen causes many fish to suffocate, and as they die, the number of oxygen-demanding decomposers increases even more.

Eutrophication refers to an excess of nutrients in water or soil. It threatens biodiversity through the excessive growth of "simple" plants which damage other plants and animals in soils, rivers and lakes. The two major causes of eutrophication are excess nutrient nitrogen (mainly nitrates and ammonium) and excess phosphates in ecosystems whereby the former source is most relevant from an air pollution perspective.

Acidification of soil is related to the build-up of hydrogen cations (acid) thereby causing a reduction of the pH value. It is caused by the deposition of nitric acid and sulfuric acid (which are common components of acid rain). Acidification also occurs when cations such as calcium, magnesium, potassium and sodium are leached and lost from the soil through the action of acid rain. Soils and waters with poor buffering capacity are the most sensitive to acid rain. Plants take base cations (mainly potassium, magnesium and calcium) from the soil as they grow, donating a hydrogen cation (proton) in exchange for each base cation. Where plant material is removed, as when a forest is logged or crops are harvested, the base cations the plants have taken up in its biomass are permanently lost from the soil. Many nitrogen compounds, which are added as fertilizer, also acidify soil over the long term through the production of ammonium in the soil. Acidification therefore also occurs as a result nitrogen emissions into the air that end up deposited into the soil.

Acidification damages plant and animal life in forests, lakes and rivers, as well as buildings and historical sites by corrosion.

Several Ni compounds are classified as human carcinogens. It may cause allergic skin reactions, affect the respiratory, immune and defence systems.

Can damage the liver, the kidneys and the digestive and respiratory systems. It can also cause brain and neurological damage and impair growth.

Can affect almost every organ and system, especially the nervous system. Can cause premature birth, impaired mental development and reduced growth.

Cadmium, especially cadmium oxide is likely to be a carcinogen. It may cause damage to the reproductive and respiratory systems.

Inorganic As is a human carcinogen. It can lead to damage in the blood, heart, liver and kidney. May also damage the peripheral nervous system.

Can lead to heart disease and damage to the nervous system and cause headaches, dizziness and fatigue.

NMVOC, important O3 precursors, are emitted from a large number of sources including paint application, road transport, dry-cleaning and other solvent uses. Certain NMVOC species, such as benzene (C6H6) and 1,3-butadiene, are directly hazardous to human health.

Aggravates asthma and can reduce lung function and inflame the respiratory tract. Can cause headache, general discomfort and anxiety.

NO2 can affect the liver, lung, spleen and blood. Can aggravate lung diseases leading to respiratory symptoms and increased susceptibility to respiratory infection.

Can cause or aggravate cardiovascular and lung diseases, heart attacks and arrhythmias, affect the central nervous system, the reproductive system and cause cancer. The outcome can be premature death.

The latest study from the World Health Organization (WHO) links long-term exposure to very fine particles (PM2.5) with cardiovascular and respiratory deaths, as well as increased sickness, such as childhood respiratory diseases. There is also new evidence for the negative effects of long-term exposure to ozone on mortality and reproductive health.

The Table A3.1 below summarizes the key health effects for major air pollutants. Of particular concern are particulate matter (PM) – a type of fine dust – ground-level ozone (O3) and nitrogen dioxide (NO2).

There is a large body of evidence on the health impacts of air pollution. Health effects related to air pollution are divided into short-term and long-term exposure effects. Effects caused by short-term exposure (in the order of days or hours) are described as acute effects. Those caused by long-term exposure (in the order of months or years) are identified as chronic effects. Impacts on mortality relate to people dying earlier than they would in the absence of exposure by air pollution. Morbidity relates instead to illness, ranging from minor effects such as coughing to life threatening conditions that require hospitalization.

As well as health risks, air pollution causes significant damage to our environment and ecosystems. Ground-level ozone damages materials, as well as agricultural crops, forests and plants, reducing their growth rates. Nitrogen oxides (NOx), sulphur dioxide (SO2) and ammonia (NH3) harm soil, lakes and rivers by acidifying them, causing loss of animal and plant life. Ammonia and NOx also disrupt land and water ecosystems by introducing excessive amounts of nutrient nitrogen – a process known as ‘eutrophication’. It is estimated that two-thirds of the protected sites in the EU Natura 2000 network are currently under severe threat from air pollution.

According to the EEA, more than 80 % of the EU’s urban population is exposed to PM levels above the 2005 WHO Air Quality Guidelines, depriving citizens of more than eight months of life on average – with life expectancy reduced by up to two years in the most polluted places.

·The consultation was open for 12 weeks, and at least 20 days' notice was given to stakeholders ahead of each consultation meeting.

·The consultation was publicised on Your Voice in Europe and a press release put out on RAPID: http://europa.eu/rapid/press-release_IP-12-1337_fr.htm

·All relevant target groups were consulted. Specific consultant reports were prepared and consulted with the stakeholders in specific sectors: mobile sources, international maritime shipping, small- and medium-scale combustion plants; agriculture.

·In order to make sure that all questions of the final on-line stakeholder survey were as clear and unambiguous as possible, the draft questionnaire was preliminarily consulted with the IASG and revised following the inputs of the IASG.

·Clear background documents were provided in all circumstances. For the public consultations, concise explanations were inserted before each section of the questionnaire, and a more detailed explanatory document was provided. At all stakeholder meeting, comprehensive consultant reports have been distributed ahead of the meeting, accompanied when necessary by guiding sheets containing lists of key questions on which the stakeholders were invited to reflect in advance.

Care was taken to ensure the minimum standards for consultation were fulfilled:

A Stakeholder Expert Group (SEG) has been set up, including representatives of the Member States, of key concerned industry associations and of relevant NGOs. The SEG met 5 times between June 2011 and April 2013

None of the options regarding shipping received more than 24% of business responses. In written comments, respondents from the shipping industry as well as some other government sectors underlined that shipping should be regulated through the International Maritime Organisation.

·Promote the designation of NOx Emission Control Areas in EU regional seas where cost-effective (those listed above and/or the Baltic and the North Sea including the English Channel) provided that such a measure is cost-effective.

·Promote the extension of the Sulphur Emission Control Areas to additional EU sea areas such as the Irish Sea, the Gulf of Biscay, the Mediterranean and/or the Black Sea provided that such a measure is cost-effective.

Two options to address emissions from the shipping sector were chosen by at least 50% of government, NGO and individual expert responses:

For business responses, however, the highest share of responses, about one-quarter, went to ‘Don’t know’, followed by ‘No additional measures’ (just under 20%).

·Regulate combustion installations above the Ecodesign capacity threshold but below the 50MW threshold set in the Industrial Emissions Directive (IED).

·Develop a supplementary and more stringent standard for installations below the Ecodesign capacity threshold for use in national and local measures such as fiscal incentives to be applied in zones that are in non-compliance with air quality limits.

A majority of NGO respondents and over 40% of government and individual expert respondents supported two options to address emissions from small and medium combustion installations (i.e. below 50 MW):

For measures to address emissions from the agricultural sector, NGO and individual expert responses gave the highest average ranking (i.e. lowest score) to the option, ‘Set tighter emission ceilings for ammonia for 2020 and 2030 in the NEC Directive, leaving flexibility to Member States on how these ceilings can best be reached’. Government responses gave the highest average ranking to the option: ‘Where cost effective, introduce new or revise existing EU legislation to establish EU-wide specific rules for e.g. improved manure storage, management and spreading techniques’. Business responses gave the highest average ranking to: ‘Promote good practices in manure management and manure spreading in Member States through support from the Rural Development Fund’. In written comments, representatives of the agricultural sector emphasised that new measures should mainly take through this fund.

For non-road machinery, the highest-ranking option was for ‘a more stringent Stage V standard’. The second-highest was to ‘ensure that approval emission tests reflect ... emissions in real world circumstances’.

Respondents were asked to rank measures to address emissions from road transport. The highest-ranking option was to introduce with minimum delay the new test procedure to ensure that ‘real world emissions of Euro 6 light duty diesel vehicles are as close as possible to the type approval limit values’. The second-ranking option was to improve ‘in-service compliance with emissions standards’.

Further, the government respondents (60%) also supported the option to allow limited adjustment of the emission inventories after the approval by the Commission, but not (20%) of the ceilings. The option to allow adjustment of the inventories also had some support from NGOs (37 %) and business (44%)

With regard to mechanisms for flexibility in the NECD management framework, a majority (63%) of respondents in governments indicated that compliance checking be made on multi-year average. This was supported also by business respondents (60 %) but not by the NGOs (7% support).

Strong majorities of all respondents were in favour of coordination between national and local levels in respect to emissions reduction measures and local air quality management.

In the general public questionnaire, 91.2% of respondents indicated that national emission ceilings should be adopted for black carbon/elemental carbon; among the expert/stakeholder responses, over 60% of NGO and individual expert responses agreed with the option; in contrast, about 60% of business and 45% of government responses were opposed.

There is strong support for the option that zone-specific plans be consolidated into national plans: this option is favoured by almost 80% of respondents to the questionnaire for the general public, similar shares of NGO and expert respondents to the questionnaire for experts and stakeholders, and almost 60% of government respondents.

Regarding ozone limit values, a majority of NGO and expert responses indicated that current non-binding limit values for ozone should be replaced with binding limit values at more stringent levels. Just over 50% of business responses (50.9%) and over just 60% of government responses, however, prefer ‘no change’ in this area.

Regarding monitoring and regulation for black carbon, a majority of public, NGO and expert responses favour both monitoring and a binding limit value; government respondents prefer either a non-binding target value plus monitoring, or only monitoring.

High shares of public, NGO and individual experts also call for AAQD limit values to be made more stringent to bring them closer to WHO guidance values. Almost 60% of government respondents, however, indicate that this should happen ‘once the EU has made further emissions reductions’, and almost 50% of business responses call for ‘no change’ on this topic.

Over 80% of respondents to the general public questionnaire, similar shares of NGO and individual expert responses to the questionnaire for experts and stakeholders, and just over 55% of government respondents call for the indicative limit for PM2.5 to be mandatory. However, 55% of business respondents are opposed to this proposal.

A further question asked whether priority should be given to human health or the environment in air pollution policy. Just over two-thirds of general public responses indicated that equal weight should be given to human health and environmental impacts. About 60% of NGO and individual expert responses chose this option; almost 60% of government respondents, however, indicated human health impacts as the priority. A large share of business responses, 25.4%, chose ‘other’: in written comments, many of them referred to socio-economic factors.

In response to a question about the extent of progress for a revised Thematic Strategy, a majority of the respondents to the general public questionnaire (55%) chose ‘maximum achievable pollution reduction’ as the level of additional progress to be pursued, and 37% called for ‘substantial progress’ that is lower than the maximum reduction. On the expert/stakeholder questionnaire, a majority of NGO responses called for the maximum reduction; a majority of government responses called for substantial progress; and just over 45% of business responses called for the ‘level delivered by the forthcoming climate and energy framework for 2030’.

Regarding the target year for a revised Thematic Strategy, just over 80% of NGO respondents and just over 60% of individual experts indicate 2025. However, a majority of business and government respondents instead choose 2030.

In terms of how future EU air pollution policy should interact with EU climate and energy policy, over 90% of respondents to the questionnaire for the general public, along with over 80% of government, NGO and individual expert respondents to the questionnaire for experts and stakeholders, support the option that EU air pollution undertakes additional measures beyond synergies with climate and energy policy. A majority of business respondents, however, feel that a new air pollution action should not go beyond synergies with climate and energy policy.

Regarding options to ensure Member State compliance with current air quality legislation, just over 90% of respondents to the questionnaire for the general public, along with over 80% of government, NGO and individual expert respondents to the questionnaire for experts and stakeholders, support strengthening emissions controls (though few business respondents supported this option).

Key strengths of the consultation responses include: the high number of responses from citizens and from experts and stakeholders; responses received from a broad range of economic sectors, government bodies and NGOs. However, limitations should be noted: for example, relatively few responses were received to either questionnaire from EU12 Member States. Key results from the consultation are here summarised per theme:

The questionnaire for the general public had 13 questions covering all these themes except the last, air pollution sources. In order to provide comparability between the two questionnaires, 12 of the 13 questions were closed, multiple-choice questions also used on the questionnaire for experts and stakeholders. The last question was an open question allowing written comments.

The questionnaire for experts and stakeholders had 38 questions (not including sub-questions). Of these, 17 were open questions allowing written comments and the others were closed, multiple-choice questions. The questionnaire covered the following themes:

The on-line public consultation on the main policy options analysed in the Impact Assessment (Options for the revision of the EU Thematic Strategy on Air Pollution and related policies) ran from 10 December 2012 until 4 March 2013 (12 weeks) on the European Commission’s ‘Your voice in Europe’ web page.. The consultation used two questionnaires: a total of 1934 individuals responded to a shorter questionnaire for the general public; for the longer questionnaire for experts and stakeholders, 371 responses were received.

A first scoping on-line public consultation was carried out at the end of 2011 with a view to broadening the information base for the initial development of the policy options to be carried forward in the following process.

Stakeholders were widely consulted through a series of formal and informal stakeholder events: two online questionnaires, a Eurobarometer survey, and a continued dialogue with interested stakeholders through multi- and bilateral meetings. Input from stakeholders has been taken into account when refining the quantitative analysis, assessing the different possible options to curb air pollution where considered appropriate (particularly with regard to the design of the policy mix), possible unwanted effects and impacts on specific sectors and Member States, and implications on subsidiarity. Consultation with Member States on matters related to the IA also took place in the meetings of the Air Quality Expert Group, which is the expert preparatory group for implementing measures under the NEC Directive and the Directives on Ambient Air Quality.

A DG RTD-funded initiative reviewed the latest scientific findings of EU RTD projects relevant to the EU Air Quality policy and gathered them into a single report aimed at the identification of key scientific messages relevant for the revision and implementation of EU Air Quality legislation. The report covered the following research review streams: Nitrogen; Particulate Matter; Ozone; Air Quality and Climate; Air Quality and Health; Integrated Assessment.

–The analysis of recommendations for the Air Quality assessment and management regimes provided by the AQUILA and FAIRMODE groups

–A study led by the Danish Centre for Environment and Energy supported the update of the EMEP EEA Emission Inventory Guidebook (the central reference manual used to support countries in estimating emissions under the NECD and the UNECE LRTAP Convention), in particular on methodologies for black carbon emissions

–The WHO European Centre for Environment and Health provided an update of the knowledge base on the health burden of air pollution and of the Health Impact Assessment model used for the analysis underpinning this Impact Assessment

–Ozone; with a focus on assessment of current situation, reasons for non-compliance and the relationship between ozone concentration and precursor emissions

–Particulate Matter, Heavy Metals and PAH; the study was also complemented by a dedicated expert workshop on Particulate Matter

–Specific review studies were conducted to supplement the information base for the most critical pollutants in terms of health risks:

–Additional insights on the extra-EU burden of pollution to EU air quality were provided by a specific study focusing on Hemispheric Transport of Air Pollutants

–Broader socio-economic and competitiveness impacts associated with different pollution reduction options and under different assumptions on the potential use of market-based and fiscal policy instruments were analysed by JRC-IPTS with the use of the GEM-E3 Computable General Equilibrium Model and of Environmentally Extended Input Output Models

–Quantitative modelling of baseline emissions and associated impacts, of the scope for further emission reduction options, and of cost-effective emission reduction strategies was conducted with the GAINS Integrated Assessment Modelling suite.

The review process draws on a long-standing knowledge base that is widely available as well as on expertise built up over several decades in air quality review and management activities. The impact assessment has been prepared also with the support of several targeted studies prepared on behalf of the European Commission by consultants, the EEA, the JRC, the WHO and other leading scientists.

MTFR Maximum Technically Feasible Reduction: the lowest level of pollution achievable by deploying all commercially available technical solutions irrespective of cost

Monitoring of the implementation and impact of measures on MCP will be based on streamlined and targeted reporting requirements on the Member States focusing on the key data which are necessary to assess the extent to which the objectives of the legislation are being achieved. The Commission will evaluate the results of this policy and report them at least every five years.

The implementation of the new NECD will be evaluated every five years (in combination with the TSAP review) and for the first time not later than 2020.

Progress towards the EU and Member States emission reduction commitments for PM2,5, SOx, NOx, NMVOCs, NH3 and CH4, for 2020 and 2025/30 will be monitored and assessed based on (reinforced) provisions in NECD relating to emission inventories and projections. The effect of the ceiling reductions on background concentrations of air pollutants will be assessed through the monitoring under the AAQD, and the impact reduction achieved will be monitored through the TSAP monitoring as described above.

The implementation of the revised TSAP will be evaluated every five years by the Commission with reporting for the first time not later than 2020. On that occasion, the scope for tightening the air quality standards under the Ambient Air Quality Directive will also be considered.

Progress in addressing third country emissions of air pollutants which affect EU air quality will be monitored procedurally (the number of ratifications of the revised Gothenburg Protocol) and regarding substantive pollution reduction in the context of the CLRTAP's monitoring and reporting mechanisms.

Progress towards the strategic impact reduction objectives will be monitored using the same indicators in which the targets are expressed ( Table 35 ). The health impacts will be monitored by periodic health impact assessments conducted by the Commission with assistance of the EEA and other expert bodies using a methodology consistent with the analysis presented here and concentration data obtained from the monitoring network under the AAQD. For ecosystem impacts of air quality, there is currently no requirement to monitor these under EU legislation. As discussed in section 6.6.1 , it is proposed that the revised NECD should only include a requirement for air pollution ecosystem monitoring in sensitive ecosystems representative for the Member States and coordinated with the effect-oriented monitoring of the LRTAP Convention. The monitoring will also use assessments from the GMES Atmosphere Service, Eye on Earth, air pollution modelling exercises and other available information sources.

Resolution of the real-world emissions problem will be monitored against the procedural milestones outlined in the CARS 2020 Communication: adoption of a new test cycle by end 2014; monitoring of emissions according to the test cycle thereafter; and type-approval in accordance with the new test cycle by 2017 at the latest. The implementing provisions will include requirements to monitor and reporting of the "real world emissions" according to the new test cycle and in-use provisions in the period before it becomes mandatory for type approval (2014-17); this will be complemented by monitoring by the Commission's Joint Research Centre involving, where possible, independent test centres.

Progress in achievement of the ambient air quality standards will be monitored by the Member States, the Commission, and the EEA as required by the AAQD and summarised annually in the EEA's air quality report. Member State action on localised exceedances will be monitored through the existing reporting provisions of the Ambient Air Quality Directive and through the strengthened network on implementation Uptake of available funds will be monitored in co-operation with DG REGIO and DG AGRI.

The ex-post analysis confirmed that the overall monitoring and evaluation provisions for the TSAP was adequate. Certain gaps were nevertheless identified that required attention. The updated monitoring and evaluation provisions will be addressed as follows.

·A proposal for a revised National Emission Ceilings Directive incorporating the Gothenburg Protocol obligations for 2020, and setting ceilings for 2025 and 2030 to achieve the new TSAP impact reduction objectives; and

·A Communication on an updated EU Thematic Strategy on Air Pollution (TSAP) setting out a policy focus on effective implementation of the baseline so as to ensure compliance with the Ambient Air Quality Directive by 2020 at the latest and updated impact reduction objectives for the 2025 and 2030 accompanied by cost-effective implementation pathways for Member States' and sectorial action. The Communication will include An outline for strengthened non-regulatory EU action plan which the Commission will promote, using the funding opportunities provided under the LIFE Regulation to support active engagement of implementing authorities at all relevant levels (local, regional, national, EU, and international) and to promote early action on the implementation of the new strategy (presented as an updated European Clean Air Programme).

In conclusion, the package of proposals supported by this Impact Assessment supports the further development of the following package of proposals:

Further (future) work will focus on detailed impact assessments related to possible additional source controls in agriculture (ammonia) and international shipping in EU waters (NOx). For agriculture emissions that focus has been particularly on ammonia but also of primary PM as these remain substantial contributors to health and environment problems. Measures relating to the agricultural sector already in the pipeline or an advanced stage of analysis include a requirement on Member States to implement specific "emission reduction measures" for ammonia in the context of implementing the NECD national programmes; the revision of the existing BREF under the IED for agriculture to deliver further reductions from large pig and poultry farms (noting that, the IED does not cover at present cattle farms which is a main emitting subsector.); and other ammonia abatement measures that could be facilitated through EU financial support to farmers for ammonia abatement such as adopting sustainable fertilization strategies (provided that MS gives priority to this in their national Rural Development Programmes). This work, including additional consultations with the sector, will be taken forward in dedicated fora established to ensure the objectives of the new strategy (and NECD) are reached. For emissions from international maritime traffic, previous studies and this review suggest that additional measures such as NOx Emission Control Areas are cost-effective. This option will also be pursued further together with Member States and stakeholders, possibly in combination with assessing appropriate incentive mechanisms such as NOx funds or linkages to flexibility mechanisms under the NECDs.

With respect to MCP, five options were considered in Chapter 7 for delivering emission reductions in the range of 10 to 20% of the required reduction for SO2, NOx and PM under the NECD. The preferred policy option would set emission performance standards that are derived from the amended Gothenburg Protocol (option 7D) coupled with a registration requirement (option R3) for plants. In particular situations such as for instance air quality management zones in non-compliance with limit values of the AAQD, Members States may have to adopt stricter abatement measures (Option 7E). This will yield annual emission reductions of 135 kT SO2, 107 NOx, and 45 kT PM (corresponding to about 22.5 kT/y PM2,5) while increasing the costs of option 6C* with 382 M€/year. The preferred policy option avoids significant impact on administrative costs and SMEs.

From the sensitivity analysis it was concluded that new NECD ceilings are required in addition to climate policy, and that the regret investment risk can be managed by appropriate policy design. Regarding the potential trade-off with biomass combustion, Ecodesign measures would help achieving the required reduction in emissions from solid fuel combustion (including biomass burning). For the remaining unregulated component of combustion (1-50MW) further action was required to manage the increased PM (and PaH) emissions resulting from climate and energy induced biomass uptake (see below). Regarding the control of methane (both a GHG and an ozone precursor), it was concluded that methane ceilings under the NECD could bring down emissions cost-effectively although flexibility would be needed in the ultimate design of the policy instrument to avoid undue interference with the implementation of the Effort Sharing Decision 406/2009/EC.

The main affected sectors for the period 2025-30 are agriculture and refineries. Gross impacts amount respectively to 0,24% and 0,10% of sectoral outputs which are reduced to 0,21% and 0,09% once improved productivity is taken into account. Costs for the agricultural sector are further offset by reverting crop yield loss amounting to €270m, close to 0,1% of sectorial output. Two other industrial sub-sectors are affected (cement and sulphuric acid production) although in neither case impacting international competition. Most SME impacts are concentrated in MCP and agriculture. Impacts are mostly mitigated in the preferred MCP control option (registration rather than permitting and emphasizing primary NOx control as the minimum standard); less than 2% of gross operating surplus.

The preferred option for 2020 entails no additional EU expenditure over the baseline except for the costs of supporting measures for national action (around €100m from LIFE). Costs will depend sensitively on local circumstances and can be covered in part by improved uptake of structural funds. Local emitters affected by measures taken at national level to reduce diesel and domestic combustion emissions up to 2020 will inevitably include some SMEs as users of light duty diesel vehicles. The preferred policy for the period 2025-30 will reduce total external costs of air pollution by €45bn (on the most conservative valuation) compared to the €212bn in the baseline, including direct economic benefits amounting to more than €3 billion: €2bn from reduced labour productivity losses, reduced health care costs of €650m, reduced crop value losses of €270m, and reduced damage to the built environment of €140m. Meeting the policy objectives for 2025-30 implies annual compliance costs of €4,7bn (investment, operating and maintenance costs for new abatement techniques) or about one tenth of the external cost savings. Overall GDP impact is very low (-0,025%) and entirely offset once increased productivity is taken into account, without considering other direct benefits. Once productivity improvements are taken into account, the policy could add around 112 thousand jobs. A target year of 2030 rather than 2025 would result in loss of net benefits in the period 2025-30. Introducing harmonised EU controls for MCPs increases the total costs by about €160m. Administrative costs associated with amending the NECD include a one-off €8m and €3.5m annual cost).

The preferred policy will support Member States in resolving remaining non-compliance with current legislation (including by rectifying failures in current EU source controls) and ensure coherence with international commitments by 2020 at the latest. A fully implemented baseline will reduce impacts in 2020 by 36% for PM2,5, 23% for ozone, 17% for eutrophication and 61% for acidification, compared with 2005. By 2030, the reductions relative to 2005 will be 53% for PM2,5, 35% for ozone, 39% for eutrophication and 87% for acidification. External costs associated with the baseline will be further reduced to €212-740bn in 2030. The preferred policy for option 2025-30 will reduce the remaining health burden from air pollution by a third more than the baseline (relative to 2005). Eutrophication impacts will be reduced by 55% more than the baseline.

To achieve further health and environmental impact reductions during the period up to 2030 (second general objective) four options for strategic impact reduction targets beyond the baseline (i.e. the same scenario as considered in Chapter 5 but up to 2030) were examined in Chapter 6. These were defined in terms of the percentage closing of the gap between the baseline and the maximum technically feasible reduction scenario related to health impacts due to PM: 25% (Option 6A), 50% (Option 6B), 75% (Option 6C) or 100% (Option 6D). A further option to meet the WHO guideline values (Option 6E) was assessed but considered not within reach before 2030. The main options were further characterised in terms of the NECD reductions for 2025 and 2030 and the technical measures required to meet them. The preferred option for setting the next strategic level is at 75% of the maximum reduction feasible with respect to PM related health impacts, further optimized for additional reductions in eutrophication and ozone (Option 6C*). This option is to be implemented by further tightening of emission ceilings under the NECD for the periods 2025 and 2030.

To ensure achieving full compliance with the air quality legislation by 2020 at the latest (the first general objective), six policy option were considered in Chapter 5: the baseline (Option 1); additional source controls (5A); tighter ceilings under the NECD (5B); supporting action for further Member States' measures (5C); further international action (5D); and amending the AAQD (5E). The preferred policy option comprises the non-regulatory programme supporting Member States' action including implementation of already agreed EU legislation as well as enhanced, governance, monitoring, and evaluation provisions. In addition the NECD will be revised to incorporate the EU's international commitments for 2020 under the Gothenburg Protocol (GP) as amended in 2012 (baseline option 1).

This Chapter summarizes the analysis of the policy options developed in Chapters 5 through 7 to address the outstanding problems defined in Chapter 3 in accordance with the objectives formulated in Chapter 4.

Chapter 6.6.2 estimates the emission reductions that would be required in 2025 from MCPs under the central case policy option 6C* at 79 kT/y SO2, 108 kT/y NOx, and 13 kiloton PM2,5, for a compliance cost of 220 M€/year. An EU-wide instrument to control emissions from these plants would extend to all Member States the technical measures identified as cost-effective in the multi-sectorial analysis of Chapter 6. Designing such an instrument based on the preferred options would lead to a compliance cost of 382 M€/year and emission reductions of 135 kT/y SO2, 107 kT/y NOx, and 45 kT/y PM (corresponding to about 22.5 kT/y PM2,5). The increased emission reductions from the sector over option 6C* are commensurate with the increased cost.

In particular situations such as for instance air quality management zones in non-compliance with limit values of the AAQD, Members States might have to adopt stricter abatement measures, as reflected in the emission level option 7E (SULES).

From the above it is concluded that the favoured policy option in terms of emission reduction is option 7D ("Gothenburg"), coupled with a registration (option R3) for all plants. This choice combines the emission reduction option delivering a high benefit-to-cost ratio, with low administrative costs, while ensuring implementation of the international obligations arising from the Gothenburg Protocol and taking into account comments and positions expressed from the different stakeholders.

·The following mitigation measures for SMEs have been considered: phased implementation with existing plants to comply later than new, temporary exemption for malfunctioning, exemptions for limiting operating hours and microenterprises, simplified reporting obligations (no permit) and limited monitoring for smaller capacity classes.

·Impacts on SMEs can be reduced to within 0.1 and 2.4% of GOS (option 7D);

·Policy can be designed so as to minimise administrative costs, by requiring only registration of plants;

·The total annualised costs for operators can be brought down to the range of 400 M€/year when secondary NOx control is applied only for part of the new plants (as required in the Gothenburg Protocol).

·For all options, cost effectiveness compares very favourably with the damage costs for all pollutants and for all options(see Table 34 ), except for NOx where high cost-effectiveness is demonstrated only for options with less stringent emission limits;

·Significant and cost-effective emission reductions can be achieved for all three pollutants (in 2025, addition reductions over the baseline of 135kT/y SO2, 107kT/y NOx and 45kT/y PM on option 7D);

The main conclusions from the detailed MCP analysis are as follows:

While the abatement costs for option 7D remains in the same range as that for option 7C, option 7D allows further emission reductions and ensures compliance with the Gothenburg Protocol.

* To allow comparison in this table, damage costs for PM2.5 (29500-83300€/t) have been reduced by half to account for the complex relationship between PM and PM2,5

For a quantitative comparison, the abatement cost is calculated as compliance cost divided by the associated emissions reduction. For all options, this compares very favourably with the damage costs (EMRC, 2013), except for NOx where this is only true for options 7C, 7D and 7E.

The policy options are qualitatively compared against four key criteria ( Table 33 ) using the following symbols: high +, low -, yes Y, no N, not applicable NA.

The impacts of a policy with light regulatory approach (R3, registration only), with emission level option 7D, where also some mitigation measures are already included, will amount to 0.1 – 2.4% of the GOS.

This includes in particular measures such as a later date of application of the emission limits for existing plants and exemptions for plants operating a limited number of hours and derogations for specific cases which have also been identified (e.g. in case of interruption of gas supply, in case of interruption of low-S fuel, when abatement equipment fails). Such mitigation measures would avoid requiring costly investments delivering only very limited environmental benefits and can thus be recommended. Elements of this have been reflected in options 7D and 7E which allow limiting the investment on existing plants with a limited remaining life time.

Therefore, in addition to the general approach of designing options with a limited administrative impact, a series of mitigation measures to further alleviate the economic burden on SMEs and to limit impacts on internal EU competition and competitiveness has been considered and assessed.

About 75% of the medium scale combustion plants are assumed to be operated within SMEs. The direct economic impacts for SMEs were quantified by comparing the total costs per plant against the level of financial resources available to the operator for investment, expressed by using the gross operating surplus (GOS). This has shown that the impact on SMEs can vary between 0.1 to 21.7% of GOS depending on the option. Also under light regulatory options values of about 20% GOS could be reached for the most costly emission level options in cases of small enterprises operating a plant of the biggest category 20-50MW.

Given its focus on very stringent standards for new facilities, the compliance costs for option 7E are higher than for option 7D. This is also the only option where costs in 2030 would be higher than in 2025 as the costs increase substantially as existing plants are replaced by new ones.

Compared to 'no EU action', option 7A would lead to an additional compliance cost in 2025 of nearly 3300 M€/year, which is about 1.5 times higher than option 7B. Under either of these options more than 80% of costs are associated with NOx abatement measures mainly due to the need to apply secondary measures in a high number of natural gas fired plants. Under option 7C, where only combustion modifications would be required to abate NOx, compliance costs are drastically lower (around 10% of costs under option 7A). The low costs are kept also under option 7D which foresees secondary abatement measures for NOx in new diesel engines and part of new boilers. In this case total compliance costs are only 2% higher than in option 7C and correspond to about 12% of the costs under option 7A.

The total annualised costs for operators related to the different options considered are shown in Table 32 below. They range between from 385 and 3486 M€/year.

The regulatory options R1 to R4 result in different administrative costs for both the operators and authorities involved. Depending on the option, administrative costs include elements such as the cost of bringing installations under the regulation, costs incurred in preparatory work for issuing permits, costs of reporting and checking compliance, etc. Several cost elements do not occur under options R3 and R4.

The introduction of emission limits also requires emission monitoring to allow verifying compliance. For the assessment, only periodic monitoring was assumed as the costs of continuous monitoring are considered prohibitively high.

Compliance costs reflect the cost of additional abatement measures needed to be implemented within the combustion plants concerned and include both capital and operational costs. When calculating total compliance costs per Member State, account has been taken of the extent to which emissions are already regulated under national legislation currently in place.

For assessing the economic impacts of the introduction of the EU wide emission limit values, a distinction was made between (i) compliance costs; (ii) emission monitoring costs and (iii) administrative costs.

*for technical reasons this is expressed as total particulate matter; to be divided by a factor 2 for convert to PM2.5

The NOx reductions foreseen in option 7D, where a bottom up-approach has been taken in the modelling, are the same as forecast in central case policy option 6C* (108 kilotons/year) which is based on the uptake of the most cost-effective pollution control measures in each Member State.

For NOx however, only options 7A and 7B require very effective but costly secondary abatement measures. Option 7C would deliver fewer reductions while this is increasing again under option 7D and option 7E due to the introduction of secondary measures in a limited number of plants.

Table 31 provides an overview of the reduction of the annual emissions from applying the five policy options 7A-7E in comparison with a "no EU action" option. The highest emission reductions would be achieved for all the pollutants under option 7A, while slightly lower, but still very significant emission reductions result from option 7B. Little difference exists between the different options for SO2 and PM.

Permit, but only for emissions to air of SO2, NOx and PM

Integrated permit similar to the Industrial Emissions Directive (IED) regime (covering not only air, but also water, soil, waste, …)

A variant of option 7D, where emission limit values for new plants are set at the level of the most stringent emission limit values applied by Member States.

A variant of option 7C, differentiating between new and existing plants, ensuring alignment with the Gothenburg Protocol provisions, incorporating a number of cost mitigation measures.

A variant of option 7B, with the same ELVs for SO2 and PM, but for NOx, the emission limit values would only require uptake of only combustion modifications (primary measures) and not of secondary (end-of-pipe) measures.

EU wide emission limit values for SO2, NOx and PM are set for all combustion plants (new and existing) in line with the general applicable emission limit values in the IED for existing (large) combustion plants (LCP) with a rated thermal input between 50 and 100 MW (Part 1 of Annex V of the IED).

EU wide emission limit values for SO2, NOx and PM are set for all combustion plants (new and existing) at the level of the most stringent legislation which is currently applicable in Member States for existing plants (for each of the fuel types and size classes considered).

This option assumes continuation of current policy measures at Member State level and no further measures for controlling emissions of SO2, NOx or PM from combustion plants <50MW in the EU. It serves as a reference to calculate the impacts of the other policy options.

In designing the policy options two aspects were considered: the emission level and the approach by which plants would be regulated, in particular whether or not a permit would be required. A summary of the different emission level and regulatory options considered is provided in Table 29 and Table 30 .

Impacts were assessed for the years 2025 and 2030 but as the trends for both years are very similar, with emissions and costs in all but one case either the same or just a few per cent lower in 2030 as compared to 2025. For clarity reasons, analytical results presented in this chapter focus mainly 2025. The results for 2030 are presented in Annex 12.

Data on medium combustion plants was gathered from the Member States. From these Member State data and through extrapolation based on a number of assumptions, an EU wide dataset (number of plants, fuels used, emissions, legislation in place) was developed with which possible control options were assessed through a bottom-up approach. Member State data was gap-filled using literature data and expert judgement for applicable control measures and associated compliance costs.

The table below (with data referring to 2010) illustrates that the three classes cover very different numbers of plants, but are comparable in term of current emissions for the three pollutants considered. In 2010, the dominant fuel for medium combustion plants was natural gas with 67% of the total fuel use (64% for plants 1-5 MW, 73% for 5-20 MW and 60% for 20-50 MW). Solid (biomass, coal) and liquid fuels each have a share of about 12%. In some countries the main fuel used differs significantly from the overall EU average.

Taking into account the broad capacity range, the variety of applications, and that pollution abatement measures (and their costs) may differ depending on capacity, MCPs have been grouped in three capacity classes. The impacts related to each of those groups were assessed separately.

Combustion plants with a rated thermal input between 1 and 50 MW are used for a wide variety of applications, including electricity generation, domestic/residential heating and cooling, providing heat/steam for industrial processes, etc. For the purposes of this assessment, two groups have been distinguished, labelled as "boilers" and "engines and turbines" (or "others"). For Member States where no indication of the distribution between these two categories has been identified, the split has been assumed to be 80:20 boilers to others.

Currently, there is no EU legislation specifically addressing air emissions of polluting substances from MCPs. A number of Member States have legislation in place for all MCPs or for a part of the capacity range. Emission limits applied nationally (or regionally), however, differ significantly across Member States.

This chapter presents a summary of the detailed impact assessment related to the options for delivering emission reductions from MCPs through an EU-wide legislative instrument as part of the revised EU Strategy on Air Pollution. The details are provided in Annex 12.A number of stakeholders stressed the importance of EU source controls in sharing the pollution reduction burden. However, the responses to the public consultation on this issue were rather diverse and did not allow conclusion on a clearly preferred option for all stakeholder groups. Several respondents referred to the need to limit administrative burden, stating it could become disproportionate in case of a "full" permitting regime both for operators and for competent authorities.

The analysis described in the previous chapters has identified cost-effective emission reductions from combustion plants with a rated thermal input between 1 and 50 MW (hereafter medium combustion plants, MCPs) in a way that suggested a potential for cost-effective EU source legislation in this area.

The analysis remains subject to uncertainties and analytical constraints that upon further consideration may broaden the range within which sound policy decisions could be taken. However it offers a solid basis updating the TSAP also considering the need to ensure a maximum of synergies possible, not least with future climate and energy policy.

·Overall benefits in the range of €45-150 (41-146) billion per annum, 10 to 35 times the compliance costs (without considering the ecosystem benefits).

·Direct economic benefits of €3,2 (3,0) billion (reduced workdays lost, healthcare cost savings, improved crop yields and reduced damage to the built environment), compensating roughly two-thirds of the pollution control costs.

·Environmental benefits of 146,000 (152,000) additional km2 of ecosystems protected from eutrophication, 73,000 of which are in Natura 2000 areas; and 23,000 (21,000) additional km2 of forest ecosystems protected from acidification.

·Health benefits of 62,000 (61 000) less premature deaths from long-term exposure to PM2,5 and 1,600 from acute exposure to ozone, as well as 84 (80) million less sick days.

Setting air pollution reduction objectives for 2025 rather than only for 2030 would not cause economic inefficiency or incoherence with climate and energy policy, and would deliver additional cost-effective emission reductions in the period 2025-2030. The policy would be implemented by a revised NECD, supplemented by a legislative proposal controlling emissions from Medium Combustion Plants (see Chapter 7) and a Clean Air Programme summarising non-legislative initiatives to support implementation (see Chapter 5). Compared to the baseline, this option would entail in 2025 (figures for 2030 in parenthesis, if different):

The analysis indicates that the option which delivers the maximum net benefit (Option 6C, the 75% gap closure for PM2.5 health impacts) offers a robust and economically sound basis for further policy consideration. Sensitivity analysis suggests that this option could be further improved by adding eutrophication and ozone targets of 80% and 46% gap closure respectively, delivered at an increased compliance cost of 1% (Option 6C*).

Option 6E of Table 12 , aiming at achieving ambient air pollutant concentration below the WHO guideline values in 2025-2030, was not taken up in the analysis because there are no technical measures currently available that could achieve the WHO guidelines on that timescale. However, we have examined the possibility of reaching the WHO guidelines on a more extended timescale. A Maximum Control Effort (MCE) scenario was developed for the years 2030 and 2050, combining the effect of further phasing out of the most polluting sources (coal), increased electrification, energy efficiency gains and the application of available technical pollution control measures. The analysis shows that the MCE scenario in 2050 would achieve background PM2,5 concentrations below the 10 g/m3 limit recommended by the WHO virtually everywhere in the EU (99,5% of territory and 99% of population exposed). Even at the level of individual monitors, 90% of stations would meet the 10 g/m3 limit, while the residual 10% would be addressed by appropriate supplementary local action for hotspot management. A trajectory towards the 2050 MCE was developed, starting from the central case emissions for 2025, and is set out in Table 27 . Whilst these reductions would all be feasible under the MCE assumptions, their practical implementation would depend on structural and other changes which cannot currently be assumed. Thus the trajectory, and the implied pollution ceilings for 2030 which result, should be considered indicative. Details are in Annex 7, section 4.

Considering the type of installations and abatement measures involved, impacts on SMEs are considered significant only for measures in medium combustion plants (MCP), addressed in chapter 7.

Implementation of the NH3 ceiling for agriculture under the NECD remains under the responsibility of the Member States; however, the analysis indicates that the required reductions can be achieved by targeting measures on larger installations covering most of the sector capacity. Residual impacts on small farms can be dealt with by Member States by exempting the smaller farms (cattle and pig farms below the 15 Livestock Units threshold and larger thresholds for poultry), and by earmarking appropriate resources under the Rural Development Fund.

A full analysis of competitiveness and SME impacts is provided in Annex 9. Potential impacts on competitiveness concentrate in sectors that – because they are more exposed to international competition – will have more difficulty passing through additional costs to their markets. Examples are refineries, chemicals, iron & steel and agriculture; it is likely that at least a subset of these users will have difficulty in passing costs through. The most significantly affected sectors would be agriculture and petroleum refining. In all cases, however, the additional resources committed under the policy options considered would be below or in the order of the 1% threshold of Gross Value Added, indicating headroom to absorb the additional costs.

Product-based legislation, in this case relevant for Ecodesign requirements for domestic heating appliances and for emission standards for non-road machinery, would in any case need to be put forward at harmonised EU-level to ensure the functioning of the Single Market; this would leave around 2/3 of the effort under the responsibility of the Member States. If, additionally, the EU-level emission controls described above were introduced for medium combustion plants and for several sectors under the IED, EU-level measures would overall deliver more than half the required effort, leaving under Member States’ responsibility one third of the costs and between 25 and 48% of the emission reductions, with the exception of ammonia emission reductions from agriculture, in which case the IED could cover around a quarter of the emission reductions and around 30% of the economic effort required of the sector.

Combined, the instruments discussed above could deliver a substantial share of the emission reductions required to achieve the objectives of the 6C* option. Table 26 summarises the total reductions necessary in 2025, the costs associated, and the share of reductions and economic effort that each instrument could deliver.

Based on existing legislation, initiatives in the pipeline and the new measure on MCP proposed here, more than 50% of the emission reductions required to meet the impact reduction objectives of the proposed revised Strategy can be delivered by source control measures at EU level. Detailed analysis on the emission reductions that could be delivered by existing instruments is provided in Annex 8.

Directive 97/68/EC on non-road mobile machinery covers engines used in a variety of applications that include small handheld equipment, construction and forestry machinery, generators, railcars, locomotives and inland waterway vessels. The NRMM sector has become an increasingly important source of air pollution owing to a steep increase in the number of non-road machines put into service, and to the less stringent emission standards compared to the road sector. Directive 97/68/EC is currently under revision, with a Commission proposal expected before the end of 2013. The cost-optimal policy option 6C* includes 64 kt NOx reductions from the non-road sector, which would be delivered mainly by setting more stringent emission requirements for inland waterway vessels, for construction and industrial machinery, and for rail engines. The same considerations and caveats on low-level sources discussed for the Ecodesign Directive apply also to these measures, and the present analysis should not preempt the outcome of the revision of Directive 97/68/EC.

Combustion plants below 1 MW rated thermal input include millions of heating installations such as single-house boilers and room heaters. The cost-optimal policy options developed in this chapter include substantial measures for these sources (including 164 kt PM reductions in 2025 in the central case option 6C*). The sources are covered by Directive 2009/125/EC on ecodesign of energy-related products, and ecodesign requirements for solid fuel and biomass boilers (below 1 MW) and local space heaters (below 50-70 kW) are expected to be finalised at the end of 2013. As these installations are responsible for more than 40% of primary PM emissions, major air quality improvements are expected as a consequence.; It must be kept in mind, however, that the general analysis of this chapter cannot fully capture the human exposure and health damage caused by household boilers, because it cannot differentiate between low-level sources (such as road vehicles and low chimneys) and high-stack sources such as power plants. Thus, this analysis should not guide in detail the decision on the exact level of stringency to be sought for ecodesign implementing regulations.

Combustion plants with a rated thermal input between 1 and 50 MW (hereafter Medium Combustion Plants or MCP) are generally not regulated at EU level, and have been identified as a notable gap in EU legislation. Annex 8 (section 6.2) provides an estimate of the emission reductions and associated emission control costs that would be required of the MCP sector on the central case policy option 6C*. These are estimated at 79 kiloton SO2, 108 kiloton NOx, and 13 kiloton PM2,5, for total additional emission control costs of 220 M€/year. A detailed assessment of options to achieve reductions in this order is provided in Chapter 7 and further background information in Annex 12. The analysis shows that extending the scope of such measures to an EU-wide instrument would result in emission reductions of 135 kiloton SO2, 107 kiloton NOx, and 23 kiloton PM2,5, for total additional emission control costs of 382 M€/year.

An EU-level pollution levy was not considered a realistic instrument to deliver the EU-wide pollution reduction objectives. However, taxation at Member State level may well remain an effective policy instrument, also to stimulate growth and employment in a green tax reform context. Positive examples include Denmark's levy on sulphur content of fuels which has driven SO2 emissions sharply down, and its tax on NOx emitted from large and medium-sized point sources.

SO2 emissions from international shipping will be significantly reduced by the recently amended Sulphur Directive at a high cost-benefit ratio. The cost-effectiveness of further emission reductions of SO2 is not evident on the basis of the current analysis, but further analysis is merited to investigate in more detail. Although any decisions on additional EU measures would need a separate, more specific analysis, there is clear potential for shipping to cost-effectively deliver NOx emission reductions. Designating NECA in the EU sea areas could deliver substantial benefits, and Member States that do so would need to take less action on land-based sources to meet the health and environmental objectives of the NECD. Although the emission reduction commitments of the NECD do not cover international maritime traffic emission, a voluntary offset mechanism could be envisaged, which could deliver substantial emission control cost reductions for land-based sources while ensuring the achievement of the environmental objectives of option 6C* in all Member States, as detailed in Annex 8, section 6.

However, additional support at EU level will be further considered. Existing BAT conclusions for large farms under the IED are due to be revised in 2014 and 2020; although these will only cover the largest pig and poultry installations, their contribution to the overall emission reduction objectives can be significant, as in 2008 these holdings represented about 25% of all EU ammonia emissions. A recent review under the IED concluded that reducing emissions from manure spreading offers the highest benefit-to-cost ratio, and this option will be further explored as a matter of priority, with a view to determining if and how ammonia emissions should be controlled at EU level. Ways to address ammonia emissions from urea-based fertilisers will also be considered, including in the forthcoming review of the Fertilizers Regulation. Any further measures on agriculture (beyond the ammonia ceilings in the NECD) will be subject to separate impact assessment.

Ammonia emissions from agriculture have so far been hard to regulate at EU level, partly due to the structure of the sector, and partly because emissions and abatement options from the same activity can be different in different places. A revised NECD will set new national emission ceilings for ammonia for 2020 and beyond, leaving it to Member States to identify and implement the appropriate measures to reach the ceilings. The measures required to achieve the ceilings are already implemented in a number of Member States, and the effect of the ceilings would be to bring other Member States up to a comparable level. Thus there is no barrier to implementing the required reductions at Member State level.

The analysis took several groups of measures and estimated the additional implementation cost if they were taken EU-wide. Details are provided in Annex 8, section 7. The measures examined would entail only relatively minor cost-effectiveness compromises, and could be delivered with a combination of existing and new policy initiatives. For many sectors (including chemicals, cement and lime, refining), emission reductions could be delivered through the adoption of revised BAT conclusions under the Industrial Emissions Directive (IED) A first round of revisions is foreseen to be finalised by 2020 as mentioned in the 7EAP, while subsequent revisions of the documents will be starting around that time. Annex 8 provides a preliminary indication of the proportion of the reduction effort that could be delivered via IED implementation for the sectors considered. However, the outcome of the process of defining and establishing BAT conclusions gives a strong role to Member States through their vote on the relevant implementing Decisions in the IED Article 75 Committee.

A number of stakeholders (including 94% of government respondents) stressed the importance of EU source controls in sharing the pollution reduction burden, and so the impacts of a range of source controls to complement the NECD have been assessed. EU-wide measures also secure single market objectives and a level playing field for economic operators being subject to the same conditions throughout the EU.

Strong majorities (80-95%) also support the pursuit of specific complementary action to curb emissions of SLCP, and specifically of BC; only 55% of expert respondents and 40% of government respondents, however, support the inclusion of separate BC ceilings in the NECD.

In the public consultation, strong majorities (85-96%) of the expert stakeholders and of the general public gave their support to requiring coordination between national and local levels in respect of emission reduction measures and air quality management.

·Measures to require that specific attention is paid to Black Carbon (BC) when designing measures to meet PM reductions, in line with CLRTAP and specifically the 2012 amendment of the Gothenburg Protocol.

·Ecosystem monitoring representative of sensitive ecosystems coordinated with the LRTAP Convention to assess the effectiveness of the NECD in protecting ecosystems

The NECD will be the main implementing instrument for the policy, and the options and related impacts of setting ceilings for the period 2025-2030 have been analysed throughout chapter 6. However, in revising the Directive a number of more detailed issues arises which are examined in Annex 11. The measures analysed for the effectiveness and costs are already part of EU and MSs commitments under the LRTAP Convention, in particular for the air emission inventories and projections as well as air pollution monitoring of ecosystem impacts. The main conclusions are that the following further provisions can be included at very modest administrative cost (around €6.9m initial cost and €2.5m annual cost EU-wide):

·the policy objectives are still achievable on alternative future scenarios, and while there could be some regret measures from application in 2025, these are concentrated in one sector and one Member State and would be dealt with by suitable flexibility arrangements.

·there is potential to set an EU methane reduction target at low or zero cost;

·option 6C could be improved (leading to option 6C*) for ecosystem and health impacts by complementary eutrophication and ozone targets of 80% and 46% gap closure, respectively, delivered at an increased compliance cost of 1%;

·while climate policy will be substantially beneficial for air quality, climate policy alone would not be sufficient to achieve the long-term air quality objective by 2050;

The following are the main points emerging from the above reported sensitivity analysis:

The effect of capping the direct additional expenditure as a percentage of GDP (while maintaining the environment and health benefits in each Member State) was assessed. The analysis is summarised in Annex 8 (section 5), and shows that any limitation substantially increases the costs for other Member States who are often in no better position to absorb the additional costs. This confirms that the effort required on option 6C* is well balanced across Member States.

Option 6C* ( Table 25 ) would require some 0,03% of the EU's GDP for expenditure in additional pollution abatement measures. However, the distribution of effort across Member States varies from 0,003% of GDP in Sweden to 0,168% of GDP in Bulgaria. This is a reflection both of different absolute GDP levels (the cost of the same piece of equipment would represent a higher share of GDP in a lower-income country); and of differences in past effort (a smaller reduction potential in countries with a longer pollution control tradition).

The third analysis assessed how much more expensive the objectives would be if the EU's renewable energy and energy efficiency targets were not fully met. The conclusion is that the objectives would still be achievable, albeit at somewhat higher costs (additional 360 M€/year in Option 6C*). Even the national emission ceilings derived from Option 6C* (ie. those calculated as most cost-effective to deliver the reductions) would still be achievable, but would come at an additional cost of 1094 M€/yr (23% higher), almost entirely for pollution abatement in residential combustion, This demonstrates the high synergetic potential of energy efficiency measures to curb energy demand and associated pollution from buildings.

The second analysis assessed whether the 6C* targets would still be achievable if growth were higher than projected in the assumed baseline. The conclusion is that the impact and emission reductions of Option 6C* would indeed still be achievable overall, and suitable flexibility arrangements could deal with any impacts at Member State level.

Of the respondents to the stakeholder consultation, just half supported 2025 as target year for the revised air policy, and almost 40% supported 2030. Among those, a majority of NGO and individual respondents chose 2025, while most government and business respondents chose 2030. However, more than 90% of the government respondents indicated that the 2030 targets should be reinforced by interim targets for 2025, with a clear preference for mandatory rather than indicative interim targets.

The first analysis assessed whether targets for 2025 could lead to regret investments – that is, to the deployment of abatement technology which would not be needed on a 2030 perspective (e.g. because other cheaper options would become available). These impacts are assessed to be around 0,5% of the total cost for the central case Option 6C*; they are concentrated in a particular Member State (the UK) and can be dealt with by suitable flexibility arrangements.

One of the key issues raised by stakeholders was how to handle uncertainties in the analytical assumptions. To test the impact of these uncertainties a range of analyses were run where key assumptions were varied (for details see Annex 8, section 4).

Respondents to the stakeholder consultation from the agricultural sector expressed concerns about the possible inclusion of methane ceilings in the NECD, stating that this would not be cost-effective for their sector. Responses from governmental bodies were divided: some stated that existing international agreements are sufficient to control methane, some others argued that methane should be included in the NECD as an incentive for international action.

However, uncertainties in the projections are substantial (covering e.g. the impact of abolishing milk quotas), and may significantly change national methane emissions and the affordability of possible emission reduction targets. Moreover, methane is one of the greenhouse gases part of the international climate negotiations and of the Effort Sharing Decision (ESD) for reducing GHG emissions outside the ETS. Setting national ceilings for CH4 may limit the flexibility offered in the ESD to meet targets. These aspects would need to be taken into account in determining the level at which any ceilings would be set, and suitable flexibility should be allowed in their implementation.

Methane targets of up to a 30% reduction in 2025 and 33% in 2030 compared with 2005, suitably differentiated by Member State (see Annex 10), could thus be implemented by measures which, while requiring up-front investment, will have a positive return. Such targets would have a small but significant effect on ozone concentrations across the northern hemisphere, but more importantly could provide a negotiating platform to pursue comparable methane emission reductions internationally.

Methane is an increasingly significant issue due to the impact of hemispheric emissions on background ozone concentrations and on climate change; several stakeholders have suggested that national methane ceilings should be included in the NECD. Annex 10 examines the reduction potential for methane in the EU. The baseline recently developed for the 2013 Climate & Energy policy framework would cut emissions by 20% in 2025 compared to 2005, although the variation between individual Member States would be large. Beyond the baseline, a further 8% reduction (to around 26% overall) could be delivered by measures that are either cost neutral or pay for themselves through energy recovery. In 2030, the baseline would respectively deliver a24% methane emission reduction compared to 2005, while the further potential for cost-free measures is estimated at 9%) (33% overall).

For the subsequent sensitivity checks the central case is adjusted accordingly and is summarised in Table 25 . (For the remainder of the IA it is referred to as Option 6C*.) Detailed information on impacts of Option 6C* including by MS and by sector are presented in Annex 7, Appendices 7.4, 7.5 and 7.6 .

Moving from 75% to 80% gap closure would protect an additional 6,7% of ecosystem for an additional expenditure of €32M per year, around 0,7% additional expenditure; beyond this level of gap closure costs start increasing more steeply. Further analysis on the achievability of these objectives under different underlying hypotheses is presented in Annex 8.

For eutrophication, the benefits of reduction are hard to express in monetary terms and so the approach taken for ozone is not applicable. Rather, a range of variants were assessed going beyond the 75% gap closure delivered by Option 6C; the costs and emission reductions are summarised in Figure 10 .

Taking ozone first, the technical measures delivering 75% gap closure for PM2,5 also close 42% of the ozone impact gap. Each additional 1% ozone gap closure would deliver a health impact reduction of €15M. Up to 46% gap closure this marginal benefit exceeds the additional expenditure (€13M per year to move from 45% to 46%), but the next 1% further closure would increase compliance costs by more than the benefits delivered. Thus 46% gap closure is optimal in economic terms. (The total cost to move from 42% to 46% ozone gap closure is €18M per year.)

The majority of respondents to the public consultation stated that the EU air policy should give equal weight to human health and to the environment; almost 60% of government respondents, however, gave priority to human health.

As explained above, the 75% gap closure on the PM2.5 health target (Option 6C) delivers also a certain reduction for ozone, eutrophication and acidification (because secondary PM precursors such as SOx and NOx affect those problems also). The outcomes are clearly valuable in themselves, however, and additional work was done to check for untapped potential for additional eutrophication and ozone reductions. (Acidification was not further pursued, since the ecosystem area left unprotected was already very small).

This sensitivity analysis shows that expenditure per sector in the vicinity of option 6C increases proportionately in most sectors. Costs for domestic combustion increase more rapidly beyond Option 6C, explaining the steeper slope of the marginal cost curve beyond this point. Below option 6C, less effort would be required especially of the agricultural and power generation sectors; however, each 5% less PM2,5 gap closure would mean renouncing €3-10 bn/y in health benefits alone, without taking into account the loss of substantial ecosystem benefits.

Table 24 below documents the additional expenditure by sector in the range +/- 10% around Option 6C's 75% gap closure. Options 6B (50%) and 6D (MTFR) are also reported for comparison. Impacts and expenditure by Member state are provided in Annex 7.

The main options (the baseline and 6A-D) are separated by rather large 'gap closure' steps (25%). Much finer-grained analysis has been done in order to compute marginal values as in Figure 9 above, and this analysis is instructive for assessing the implications of small changes in the preferred level of health and environmental impact reductions around Option 6C.

Taking all the above elements into consideration, the overall effect of achieving the air quality objectives for the 2025-2030 period compared to the baseline is an eventual small global cooling effect on climate. Calculated over a 100 year time horizon the cooling effect corresponds to - 0,0023 C (+/-0,0003 C) and over 20 year time horizon it is only slightly lower (-0,0021 C+/-0,0002 C). The regional cooling effects in Europe and the Arctic are likely to be stronger. The European contribution to depositions of black carbon in the Arctic is reduced by about 6 % as compared to the baseline.

There are further inter-linkages between climate and air policy. Firstly, some pollutants are also short-lived climate forcers; these include black carbon and ozone, and action to reduce their concentrations will be beneficial for both climate change mitigation and air quality. Secondly, atmospheric aerosols such as sulphates reflect incoming solar light, alleviating the global warming effect; this represents therefore a possible antagonism between climate and air quality measures, although the precise climate effect of aerosols is highly uncertain and any conclusions should be taken with due caution. Further, methane is both a potent GHG and an ozone precursor contributing to the raising hemispheric background concentration of ozone (which in turn is also a GHG). Reducing methane emissions is therefore a clear opportunity for synergy between climate and air quality policies, which is further discussed in section 6.5.5.

Another important aspect to consider is the risk that climate change mitigation and air quality policies would deliver incoherent signals to investors, resulting in possible stranded costs similarly to the cases discussed in section 6.5.1 and Annex 8.1. Some sectors, such as the power and refinery sectors, may face in principle the risk that accelerated decarbonisation of electricity supply and of the transport sector could result in early retirement of large capacities and make redundant any additional pollution abatement investments on those plants. However, the time horizon of the proposed air quality policy targets (2025-2030) will give sufficient time for plant operators to develop rational investment plans that give full value to the invested capital, also taking into account that the future low-carbon policy would be based on a cost-effective pathway minimising stranded cost risks.

This conclusion is also supported by the results of the stakeholder survey, with over 90% of general public and a strong majority of expert respondents (including 80% of government respondents) stating that the future EU air policy should set out additional measures beyond the maximisation of synergies with the forthcoming climate & energy policy.

Thus while the impacts of decarbonisation are clearly positive for air, they would deliver only a sixth to a third of the health impact reduction from additional air policy, and only marginal reduction of ecosystem impacts.

Based on a comparison of the available scenarios (see Annex 8.2), decarbonisation measures alone could reduce health impacts from PM2,5 by approximately 5% in 2030 and 10% in 2050 compared to the current legislation baseline. This compares with reductions from additional air pollution measures of around 30% in both years. Decarbonisation of the economy has a more substantial impact on acidification and ground-level ozone, delivering as much as two thirds of the MTFR reduct