Estimating the social welfare benefits

The social welfare benefits of achieving the Autogas vision as described by the Alternative Scenario would be substantial, totalling at least US$54 billion over the period to 2040. This is roughly equal to the annual GDP of Croatia. Most of this benefit comes from the reduced damage to human health resulting from lower emissions of NOx and PM_2.5, mainly for LDVs, and less smog (Table 5).

Reduced emissions of NOx alone contribute around US$35 billion and PM_2.5 another US$4 billion. More than half of these savings come from Europe, with around one-quarter coming from the Asia-Pacific region (Figure 15). The increase in emissions of CO and VOC would have a negligible impact on overall societal cost, as the health effects of those increases, which are modest, are far smaller than for NOx and PM_2.5.

Table 5: Global emission savings and cumulative associated social welfare benefits in 2018-2040 in the Alternative Scenario

wdt_ID	Type of emission	Emission savings (Mt)	Social welfare benefits (US$ billion)
3	NOx	2.788	34.97
4	PM	0.049	3.80
5	CO2 (well-to-wheels)	130.280	15.24
6	Total	n.a.	54.01

Note: Relative to the Baseline Scenario. Welfare gains from lower CO2 emissions assume a social cost of carbon of US$115/tonne.
Sources: Menecon Consulting analysis based on TML data and Clean Air for Europe data From DG Environment of the European Commission.

“The societal benefits of achieving the Autogas vision in the form of cleaner air, better health and reduced climate change would be substantial, totalling at least US$54 billion over the period to 2040.”

Figure 15: Cumulative social welfare benefit of reduced emissions of NOx and PM2.5 in 2018-2040 in the Alternative Scenario by region

Note: Relative to the Baseline Scenario.
Sources: Menecon Consulting analysis based on TML data and Clean Air for Europe (DG Environment of the European Commission) data.

The value of the socioeconomic benefits of lower CO2 emissions over the period to 2040 is estimated at around US$15 billion worldwide. This is an indicative estimate based on an assumed social cost of carbon of around US$115 per tonne for all regions.<sup>1</sup> Asia-Pacific accounts for over 40% of the global societal benefits and Europe and Eurasia for most of the rest.

The societal benefits from improved air quality and reduced climate change advantages would be complemented by the economic benefits enjoyed by end-users making the switch to Autogas. Motorists would enjoy lower fuel costs that quickly payback the upfront cost of converting their vehicle or buying a slightly more expensive OEM model. Switching to Autogas would entail a modest loss of government revenue as a result of lower excise taxes on Autogas, but this would be far outweighed by the societal benefits of reduced environmental damage. Additional economic benefits would also come from the additional jobs created in the Autogas sector.

(1) The social cost of carbon (SCC) represents the economic cost associated with climate damage (or benefit) that results from the emission of an additional tonne of CO2. It is typically calculated as the net present value of the difference between climate change damages caused by anthropogenic emissions of CO2. It provides an economic valuation of the marginal impacts of climate change. The value of SCC is subject to considerable debate and estimates vary widely according to the country concerned and methodology used. The figure adopted here is that used by the European Commission (2014).

A Global Roadmap for Autogas