Ways and Means for Achieving Climate Change Mitigation

Jayant Sathaye

CLA, WGIII

Lawrence Berkeley National Laboratory, Berkeley, CA, USA

18 July 2001

Key Messages

• Many barriers prevent the realization of the potentials noted earlier.

• Identification of barriers can help in the development of sharper and targeted policies, measures, and instruments.

• Cost of barrier removal increases estimated bottom-up costs.

• Explicit consideration of barriers and the no regret opportunities linked to them can reduce top-down cost estimates.

2010 Mitigation Potential (under $100 per t C)

• Energy and other technological options

– 1.9 -- 2.6 Gt C/yr

• Land use, land-use change and forestry– about 1 Gt C/yr

Opportunities and Barriers

Realizing these Potentials Requires Overcoming Many Barriers to their

Implementation

• Barriers add to the cost of implementation, and reduce the realizable potential

• Removal of barriers during capital stock turnover and periods of rapid social change can minimize disruption and mitigation costs

Mit

itga

tion

Pot

enti

al

Time

Market (Achievable) potential

Economic potential

Socio-economic potential

Technological potential

Physical potential

Opportunities and Barriers -- A Classification

Market failures

Values, attitudes, social barriers

High costs

Knowledge gap

Market and Institutional Barriers (Market Failures) to

Achieving Economic Potential: Examples

• Lack of information

• Lack of access to capital, especially for smaller firms

• Absence of full-cost pricing

• Risk aversion in financial institutions, including Multilateral Development Banks

• Trade barriers, such as tariffs or export restrictions

Social and Cultural Barriers to Achieving Socioeconomic Potential:

Examples

• Individual behavior

• Social values and preferences

• Cultural traits and norms

• Gender issues

Mitigation Opportunities for a Given Country May be Found in the Removal

of Any Combination of Barriers

• Most countries could benefit from innovative financing, institutional reform and removing barriers to trade.

• Developed countries: Removing social and behavioral barriers.

• Economies in transition: Price rationalization

• Developing countries: Price rationalization, increased access to data and information, availability of advanced technologies, financial resources, and training and capacity building.

Policies, Measures and Instruments: Sectoral Level

• Market based instruments (taxes, tradable permits, subsidies, deposit/refund systems)

• Standards, product bans, energy mix requirements

• Voluntary agreements

• Information, and labeling programs

• Government investment/ R&D spending

Sectoral PMIs Only As Effective As Allowed by Macro Conditions

Policies, Measures and Instruments International and Macro Levels

• Macro policies -- Examples– Reform of the legal system– Create open and competitive markets – Develop physical and communications

infrastructure– Improve land tenure– Improve macro-economic stability

• International co-ordination can address competitiveness, international trade rules, and “leakage”

Conclusions • Importance of barriers differs by region and

sector

• Setting appropriate macro-conditions can contribute more to mitigation than improving sectoral policies, measures, and instruments

• Cost of barrier removal increases bottom-up mitigation cost estimates, and can reduce top-down cost estimates

• IPCC review shows a major gap in research– Few studies explicitly identify barriers and ways to

overcome them, and estimate the cost of their removal