3.7.2. Policy Areas

3.7.2.1. Population and Social Welfare Policies

Given the interactions between demographics and social and economic development discussed in Sections 3.2 and 3.3, population and social welfare policies that currently exist or are options for various countries can also be viewed as "non-climate" policies (in the sense that they are not motivated by climate concerns, but will affect future GHG emissions). Studies support the notion that reduced population growth significantly abates GHG emissions. Indeed, some integrated assessment models suggest that emissions scenarios may be more sensitive to population changes, with respect to normalized uncertainty analysis, than to other factors that affect emissions (Nordhaus, 1993). Therefore, social policies that affect fertility rates (and mortality and migration rates) also could have a significant impact on future emissions. By the same token, demographic policies for health and education may also affect productivity growth in a positive manner. Thus, the desirable objective to further development may result in higher economic growth, consumption, and emissions per capita. The overall effects are likely to vary from country to country.

For instance, efforts can be made to help women avoid unwanted pregnancies or to reduce infant mortality. Demographic health surveys suggest that more than 100 million women in less developed countries do not want to become pregnant, but they do not practice contraception (Bongaarts, 1994). The Cairo Program of Action (UN, 1995) estimates that US$17 billion annually would successfully deliver family planning and reproductive health services to the majority of people in developing countries who desire them. Family planning assistance today contributes to the observed recent declines in fertility rates in many developing countries. In one study, it was estimated that such programs over the past two decades reduced the present population by about 40 million persons, which in itself may reduce future population levels by some 400 million people in the year 2100 (Bongaarts et al., 1990).

Other policy measures are less direct, but also exert important influences on fertility rates. These include improvements in health care and female education, especially primary school education, which is a factor that correlates highly with fertility rates in young women (Bongaarts, 1994). Similarly, measures that improve gender equality reduce fertility rates as they encourage non-maternal roles and increase employment and empowerment opportunities for women. Their implementation is currently unrelated to concerns about global warming, yet their effect on this environmental issue may be significant.

3.7.2.2. Policies that Target Economic Development and Technological Innovation

A wide range of policies and circumstances may contribute toward the desirable objective of furthering development and economic growth (see Section 3.3). In the short term, fiscal, monetary, and interest rate management policies are among the main instruments used by governments. In the longer term, economic growth may be affected more by measures that influence fundamental capabilities, such as policies in education, and in the development of physical infrastructure, social and economic institutions, and national systems for innovation.

As emphasized in Sections 3.3 and 3.4, the effects of economic growth on GHG emissions depend on economic structure and technology. Governments generally aim to encourage the development of particular sectors that are perceived to contribute to national goals for security, food and energy supply, high employment, and long-term economic growth (Maddison, 1995). The encouragement may take many forms, such as direct subsidies and protection from foreign competition, public investment in infrastructure, training, or R&D, and support for collaborative development programs and information networks (OECD, 1997a). If governments support sectors that are fossil-fuel intensive, the tendency to increase GHG emissions is clear. However, protectionist policies may also reduce national economic efficiency, which dampens income growth and tends to restrict growth in GHG emissions. Conversely, if governments support the development of rapid-growth sectors, the tendency may be to promote long-term economic growth, increase household income and consumption, and hence increase GHG emissions.

Over a period of 100 years the policies that most influence the development of GHG emissions are probably those that contribute to the processes of technical and social innovation, which themselves contribute to economic development. Innovation policies mostly emphasize the development of technologies that improve international competitiveness with new products and improved performance or reduced costs of existing products. The policies are not usually designed to achieve these and other (e.g., environmental and social) objectives in an integrated way (OECD, 1998b). Hence, their impact on GHG emissions is hard to predict, but as currently constituted many national systems for innovation could tend to increase emissions by stimulating economic growth.

3.7.2.3. Energy, Agriculture and Other Resource Management Policies

Government policies on energy and agriculture have, on the whole, paralleled global trends during the 20^th century. Early in the century there was a move toward protectionism, which aimed to secure national self-sufficiency, especially in food and energy. Governments established import quotas and tariffs, subsidies for domestic production, and research and investment programs to improve agricultural productivity and develop new energy sources. During the 1980s policy emphasis shifted in many countries, and has continued into the 1990s, toward open borders and reduced subsidies and R&D. Nonetheless, numerous energy and agricultural policies persist that influence production and trade patterns and hence also GHG emissions.

3.7.2.3.1. Energy policies

Various policies exist to promote energy efficiency and the adoption of energy-efficient technologies and practices. Government standards, such as appliance efficiency standards, motors standards, and the automobile fuel economy standards in the US, prescribe the energy consumption levels of particular commodities. Residential and commercial building standards require the use of energy-efficient construction practices and components. Information dissemination programs, such as the Green Lights program in the USA or similar programs in other countries, provide consumers with the information required to make purchase decisions as well as to install and operate energy-efficient equipment. Subsidy or investment credit programs are often used to promote the adoption of a particular technology; combined heat and power was promoted in The Netherlands through such a program in the 1980s (Farla and Blok, 1995). Other energy efficiency policies or programs include audits and assessments, rebate programs, government procurement programs, benchmarking programs, labeling programs, and technology demonstration programs (Worrell et al., 1997).

Many reports point to government subsidies as a major impediment to cleaner production of energy (Burniaux et al., 1992; Larsen and Shah, 1992; de Moor and Calamai, 1996; Roodman, 1996; Greenpeace, 1997). In addition to direct subsidies, governments use a wide variety of measures to support domestic or regional industries, or to protect legal monopolies. These policies inhibit innovation and can lead to higher levels of pollution or resource intensity than would occur in a less constrained market. A recent OECD study found that reform of supports to coal, electricity, and transport could substantially reduce CO₂ and acid rain emissions in some countries (OECD, 1997a). In other countries, subsidy reform would have minimal direct environmental benefits, but would increase the effectiveness or reduce the cost of environmental policies such as eco-taxes and emission limits. Where subsidies support nuclear power or other non-fossil energy sources, their reform could conversely lead to increased GHG emissions. Energy taxes also have an important influence on energy demand and hence GHG emissions. The majority of energy taxes are intended as a pure fiscal instrument or, in the case of road fuel taxes in some countries, to raise funds for road provision and maintenance. Many countries are raising these taxes, or considering doing so.

3.7.2.3.2. Agriculture policies

Agricultural policy reform has received more attention than energy policy reform in recent years. Most OECD countries support domestic agriculture, whether through direct subsidies, import tariffs, or price controls. The general trend is toward a reduction in these supports, in part as a result of trade negotiations, but also as part of the broader trend toward policies that reduce budget deficits and improve market efficiency. Supports are also being reformed to reduce their linkage to production volumes. Where subsidies are linked to the volume of production, they provide an incentive to increase output beyond the level of demand, which leads to surpluses. This incentive may tend to increase GHG emissions as a result of soil carbon depletion and oxidation, excessive use of nitrogen fertilizer leading to N₂O emissions, and over-intensive animal farming that results in excess CH₄ emissions from manure and from the animals themselves (OECD, 1997b; Storey, 1997). The overall impact of agriculture subsidy reforms on GHG emissions will depend on associated fiscal changes in other parts of the economy.

Overproduction in one country may be compensated to some extent by lower production elsewhere. However, in general, incentives for higher agricultural output are likely to lead to more production globally, with a shift from consumption of plant products to animal products, which are land-, resource-, and GHG-intensive. In a few industrialized countries a small trend has developed to support organic farming and regional marketing of foods. Future policies may thus lead to agricultural subsidies that are linked more to ecological and social factors than to the volume of production.

3.7.2.3.3. Dematerialization policies

GHG emissions are likely to be reduced by other policies for the sustainable use of resources, such as land, forest ecosystems, mineral resources, water, and soil. Instruments may include direct planning, regulations, establishing property rights and obligations, information, education, and persuasion, and a broad range of policies to support or influence the innovation process to encourage dematerialization (OECD, 1998b).

3.7.2.4. Environmental Policies

While environmental objectives often form part of the rationale for agriculture and energy policy reforms, many instruments are focused entirely on environmental objectives. The most obvious of these are pollution regulations and standards, eco-taxes, and voluntary and other measures.

In the context of non-mitigation GHG emission scenarios, probably the most important environmental policies are those related to sulfur emissions (see Section 3.4.3). Sulfur emissions are controlled for local and regional environmental reasons, but sulfur oxides do have a radiative impact, and sulfur controls can lead to the switching of fuel away from coal and oil. Thus, almost paradoxically, environmental policies to combat urban air pollution and acid rain may (via reduced sulfate aerosol "cooling") exacerbate climate change. Most sulfur control policies to date have involved either regulations that limit the concentration of sulfur oxides in flue gas from large combustion plants, or give standards for the sulfur content of fuel. Recently, sulfur control policies have become more sophisticated, and aim to limit aggregate emissions on a national or regional basis to minimize acidic deposition in a trans-national context. New policy instruments have also been introduced. The USA has pioneered a "cap and trade" system with tradable emission permits (for a review see Joskow et al., 1998).

Other environmental policies with a greenhouse impact include controls on ODSs; urban air pollution precursor compounds (CO, NO_x, CH₄, and NMVOCs), especially from transport and domestic solid fuels; and controls on agricultural practice to reduce water pollution and soil erosion. Policies in all of these areas are likely to contribute to GHG mitigation. However, some options, such as an accelerated shift to electric vehicles to reduce local air pollution, could result in higher GHG emissions in the short term in certain circumstances (Michaelis et al., 1996).

3.7.2.5. Transportation and Infrastructure Policies

Policies on infrastructure may have a very long-term influence on GHG emissions. although in many cases the causal relationships are complex and not understood well enough to justify quantitative analyses of the policy options. These include urban planning guidance, construction regulations, policies on ownership and financing of infrastructure, and user pricing for roads and parking. The most significant impacts on GHG emissions are likely to derive from policies that influence demand for travel by car and for freight transport by truck (Newman and Kenworthy, 1990; Michaelis et al., 1996; Watson et al., 1996), those that influence energy use in buildings (Levine et al., 1996; Watson et al., 1996), and those that influence the conversion of forest for agriculture, or agricultural land for urban development.

3.7.3. Quantification of Impacts and Implementation of Policies in SRES

Few of the policies and instruments identified above can be represented directly in the models typically used to produce GHG emission scenarios. In general, the impacts of policies are highly uncertain (Houghton et al., 1996). Price-based instruments have been analyzed in greater detail than other types of measure, and many empirical studies have been carried out to determine the response to price changes of demand for various commodities, especially energy. However, such research and analysis usually yields very large ranges of uncertainty in the magnitude of the price response, and often reveals a strong dependence on specific circumstances. Even for price-based policies, national and global effects over 20-100 years are very uncertain. For the SRES, it is not possible to make a precise link between governments' application of specific policies and the outcome in the various scenarios.

Instead, the qualitative SRES scenario storylines give a broad characterization of the areas of policy emphasis thought to be associated with particular economic, technological, and environmental outcomes, as reflected in alternative scenario assumptions in the models used to generate long-term GHG emission scenarios. In some selected areas, such as sulfur control policies, a wide body of literature can be drawn upon to derive specific pollution control levels or maximum emission trajectories consistent with a particular interpretation of a scenario storyline. In other areas, such as GHG gases controlled by the Montreal Protocol, existing scenarios that reflect the most up-to-date information are used as direct input to SRES.

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