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

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 EEL. 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 0.11-0.21 years (41-78 days) 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 EEL scenarios during 2010-2030 totaled approximately US$ 5,972-6,893 per person or US$ 170-190 per MW h. 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. (C) 2013 Elsevier Ltd. All rights reserved.