IPCC “Climate Change 2007: Mitigation of Climate Change”
June 1, 2007
The IPCC released its final report on climate change, concluding the costs of measures to address global warming are reasonable.Governments likely will soon adopt some of the IPCC’s recommended measures, primarily focusing on practical solutions such as carbon taxation systems.
The Intergovernmental Panel on Climate Change (IPCC) delivered the final part of the IPCC’s Fourth Assessment Report, "Climate Change 2007: Mitigation of Climate Change" (the Report) on 4 May 2007 at its conference in Bangkok, Thailand.
The Report, produced by Working Group III, focuses on the scientific, technological, environmental, economic and social aspects of the mitigation of climate change. It offers solutions to the problems raised in the first two parts of the IPCC Fourth Assessment Report, which related to the physical science of climate change and the impact of climate change on natural, managed and human systems.
Summary of Findings
The Report is based on new literature published since the IPCC Third Assessment Report and the Special Reports on CO2 Capture and Storage and on Safeguarding the Ozone Layer and Global Climate System. The main conclusion of the Report is that the benefits of climate change mitigation will be able to counteract the costs, so that global warming can be avoided without too great a cost.
The Report comments on the fact that global greenhouse gas emissions increased by 70 per cent between 1970 and 2004, and such emissions are projected to increase by a further 45 to 110 per cent between 2000 and 2030. However, the Report concludes that there are indications suggesting that there is substantial economic potential for the mitigation of greenhouse gas emissions over the next few decades, which could offset the projected growth of such emissions or reduce them below current levels. Broadly, these have been divided into two spheres: short-term mitigation measures and long-term mitigation measures.
Short-term mitigation measures
The Report’s suggestions for short-term (i.e., until 2030) climate change mitigation measures include the following:
Lifestyle and behaviour: Lifestyle changes and consumption patterns which focus on conservation of resources can contribute to a sustainable lower-carbon economy. Education can be used to create market acceptance of energy efficiency. Industry management practices, such as staff training and reward systems, can overcome barriers in industry to energy efficiency.
Energy supply: Greenhouse gas emissions could, in many cases, be reduced by new energy infrastructure investments in developing countries; upgrades of energy infrastructure in industrialised countries; and policies that promote energy security.
As regards energy sources, the higher the market prices of fossil fuels, the more low-carbon alternatives will be competitive. Given costs relative to other supply options, if carbon prices were US$50, renewable energy could have a 30 to 35 per cent share and nuclear energy could have an 18 per cent share of total electricity supply in 2030.
The Report concludes that it is often more cost-effective to invest in end-use energy efficiency improvement than to increase energy supply to satisfy demand for energy services.
Transport: The effect of mitigation in the transport sector may be counteracted by growth in the sector.
Improved vehicle efficiency measures, leading to fuel savings, would have a number of net benefits, but the market potential is much lower than the economic potential due to other consumer considerations such as performance and size.
Biofuels could play an important role in addressing greenhouse gas emissions, depending on the method of production. In the aviation sector, reduced greenhouse gas emissions can be achieved through improved fuel efficiency from technology, operations and traffic management.
Buildings: Energy efficient buildings could limit the growth of greenhouse gas emissions, improve indoor and outdoor air quality, improve social welfare and enhance energy security. The ability of developing countries to invest in energy efficient buildings may be limited by a lack of available technology, poverty and higher costs of reliable information.
Industry: Upgrading older, inefficient industrial facilities could result in significant emission reductions. However, this is likely to be prevented by the slow rate of turnover for capital stock, lack of financial and technical resources, and limitations in the ability of firms, particularly small and medium-sized enterprises, to access and absorb technological information.
Agriculture: Measures such as soil carbon sequestration and reductions in methane and nitrous oxide emissions in some agricultural systems have the potential to reduce greenhouse gas emissions considerably. Biomass from agricultural residues and energy crops can be an important energy feedstock. However, widespread use of agricultural land for biomass production may compete with other land uses and could have positive and negative environmental impacts and implications for food security.
Forestry: Afforestation, reforestation, forest management, reduced deforestation and use of forestry products for bioenergy could all reduce emissions considerably. Sixty-five per cent of the mitigation potential of measures relating to forests exists in the tropics.
Waste: Post-consumer waste contributes less than 5 per cent of global greenhouse emissions, but waste minimisation and recycling provide important indirect mitigation benefits through the conservation of energy and materials. Developing countries and economies in transition are constrained in their waste management policies by a lack of local capital and a lack of expertise on sustainable technology.
Geo-engineering: Geo-engineering options, such as ocean fertilisation to remove carbon dioxide directly from the atmosphere or blocking sunlight by bringing material into the atmosphere, remain largely speculative and unproven with the risk of unknown side effects. The cost of these options remains unknown.
Long-term mitigation measures
The Report also suggests various long-term (beyond 2030) mitigation measures, including the following national policies and instruments.
Carbon prices: Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-emission products, technologies and processes. Such policies could include economic instruments, government funding and regulation.
Regulations and standards: Regulations and standards generally provide some certainty about emission levels and may be useful if there are reasons why producers and consumers may not respond to price signals. However, regulations and standards alone may not be sufficient to induce innovation.
Taxes and charges: Taxes and charges can set a price for carbon but cannot guarantee a particular level of emissions. Taxes are an efficient method of internalising costs of greenhouse gas emissions.
Tradable permits: By contrast to taxes and charges, tradable permits will establish a carbon price. Allocation of such permits could have distributional consequences. Fluctuation in the price of carbon makes it difficult to estimate the total costs of complying with emission permits.
Financial incentives: Financial incentives are often critical in overcoming barriers to the development of new technologies.
Information campaigns: Information campaigns may promote informed choices and contribute to behavioural change.
Research and development: Research and development can stimulate technological advances and reduce costs. Government support for research and development through financial contributions, tax credits, standard setting and market creation is important. Public benefits of investments in research and development are much larger than private sector benefits, justifying government support.
Benefits
The Report suggests that there are a number of collateral benefits from climate change mitigation, which could be set off against any costs, namely: health benefits from reduced air pollution; increased energy security; increased agricultural production; reduced pressure on natural ecosystems; balance of trade improvement; provision of modern energy services to rural areas; and increased employment.
Repercussions
The most important conclusion of the Report is that the costs of measures to address global warming are reasonable. Stabilisation of atmospheric carbon at between 445 parts per million (ppm) and 535ppm would cost less than 3 per cent of global gross domestic product (GDP). Some economists estimate that, if no action is taken, global warming could reduce global GDP by up to 30 per cent by 2100.
As the Report has no formal political status, and is advisory rather than mandatory, some commentators doubt that it will have a serious effect on government policies. In addition, although the Report projects that global GDP should not be reduced by more than 3 per cent, the IPCC acknowledged that "regional costs may differ significantly from global averages". Governments of countries with more seriously affected economies may choose to implement fewer of the proposed measures.
Even if other measures are not implemented, it is likely that a number of governments will consider taxing carbon, as recommended by the Report. In addition, cap-and-trade systems offer a practical solution to emitters of greenhouse gases by establishing a price and market for carbon and making it possible to trade credits.
The European Union’s Emissions Trading Scheme (ETS) already has established a price for carbon, which is just below €20 (US$27) for 2008. This is on target for the Report’s suggested carbon prices of US$20 to US$50 by 2020 to 2030. In the United States, interest is growing in cap-and-trade systems, as reflected in a number of recent bills before the US Congress. The Report makes it more likely that other major powers will also take the lead by introducing such systems on a national and international level.
