Cost-benefit analysis of sustainable energy development using life-cycle co-benefits assessment and the system dynamics approach

Abstract

A novel Air Resource Co-benefits model was developed to estimate the social benefits of a Sustainable Energy Policy, involving both renewable energy (RE) and energy efficiency improvements (EEI). The costs and benefits of the policy during 2010–2030 were quantified. A system dynamics model was constructed to simulate the amount of energy saving under the scenario of promoting both RE and EEI. The life-cycle co-reductions of five criteria pollutants (PM10, SO2, NOx, CO, and ozone) and greenhouse gas are estimated by assuming coal fired as marginal electricity suppliers. Moreover, a concise life table approach was developed to estimate averted years of life lost (YOLL). The results showed that YOLL totaling 0.11–0.21years (41–78days) per capita, or premature deaths totaling 126,507–251,169, is expected to be averted during 2010–2030 under the RE plus EEI scenario. Specifically, because of the higher investment cost, the benefit-cost ratio of 1.9–2.1 under the EEI scenario is lower than the 7.2–7.9 under the RE scenario. This difference reveals that RE is more socially beneficial than EEI. The net benefit of the RE and EEI scenarios during 2010–2030 totaled approximately US$ 5,972–6,893 per person or US$ 170–190 per MWh. To summarize, this study presents a new approach to estimate averted YOLL, and finds that the health benefits can justify the compliance costs associated with the Sustainable Energy Policy.