Potential, Barriers, Opportunities, Policies, and Costs of Stabilizing Atmospheric Greenhouse Gas Concentrations in the Long Term

Cost of stabilization depends on both the target and the emissions pathway.

There is no single path to a low-emission future, and countries and regions will have to choose their own path. Most model results indicate that known technological options²⁰ could achieve a broad range of atmospheric CO₂ stabilization levels, such as 550 ppmv, 450 ppmv, or below over the next 100 years or more, but implementation would require associated socio-economic and institutional changes. To achieve stabilization at these levels, the scenarios suggest that a very significant reduction in world carbon emissions per unit of GDP from year 1990 levels will be necessary. For the crucial energy sector, almost all greenhouse gas mitigation and concentration stabilization scenarios are characterized by the introduction of efficient technologies for both energy use and supply, and of low- or no-carbon energy. However, no single technology option will provide all of the emissions reductions needed for stabilization. Reduction options in non-energy sources and non-CO₂ greenhouse gases will also provide significant potential for reducing emissions.

The development and diffusion of new economically competitive and environmentally sound technology can substantially reduce the costs of stabilizing concentrations at a given level. A substantial body of work has considered the implication of technology development and diffusion on the cost of meeting alternative stabilization levels. The principal conclusion is that the cost of emissions mitigation depends crucially on the ability to develop and deploy new technology. The value of successful technology diffusion appears to be large and depends upon the magnitude and timing of emissions mitigation, the assumed reference scenario, and the economic competitiveness of the technology.

The pathway to stabilization can be as important as the stabilization level itself in determining mitigation cost. Economic modeling studies completed since the SAR indicate that a gradual near-term transition from the world's present energy system towards a less carbon-emitting economy minimizes costs associated with premature retirement of existing capital stock. It also provides time for investment in technology development and diffusion, and may reduce the risk of lock-in to early versions of rapidly developing low-emission technology. On the other hand, more rapid near-term action would increase flexibility in moving towards stabilization, decrease environmental and human risks associated with rapid climatic changes, while minimizing potential implications of inertia in climate and ecological systems (see Question 5). It may also stimulate more rapid deployment of existing low-emission technologies and provide strong near-term incentives to future technological changes that may help reduce the risks of lock-in to carbon-intensive technologies. It also would give greater scope for later tightening of targets should that be deemed desirable in light of evolving scientific understanding.

Cost-effectiveness studies with a century time scale estimate that the mitigation costs of stabilizing CO₂ concentrations in the atmosphere increase as the concentration stabilization level declines. Different baselines can have a strong influence on absolute costs. While there is a moderate increase in the costs when passing from a 750 to a 550 ppmv concentration stabilization level, there is a larger increase in costs passing from 550 to 450 ppmv (see Figure 7-3) unless the emissions in the baseline scenario are very low (see Figure 7-4). Although model projections indicate long-term global growth paths of GDP are not significantly affected by mitigation actions towards stabilization, these do not show the larger variations that occur over some shorter time periods, sectors, or regions. These results, however, do not incorporate carbon sequestration, and did not examine the possible effect of more ambitious targets on induced technological change. Costs associated with each concentration level depend on numerous factors including the rate of discount, distribution of emission reductions over time, policies and measures employed, and particularly the choice of the baseline scenario. For scenarios characterized by a focus on local and regional sustainable development for example, total costs of stabilizing at a particular level are significantly lower than for other scenarios. Also, the issue of uncertainty takes on increasing importance as the time frame is expanded.

Lower emissions scenarios require different patterns of energy resource development and an increase in energy R&D to assist accelerating the development and deployment of advanced environmentally sound energy technologies. Emissions of CO₂ due to fossil-fuel burning are virtually certain to be the dominant influence on the atmospheric CO₂ concentration trend during the 21st century. Resource data assessed in the TAR may imply a change in the energy mix and the introduction of new sources of energy during the 21st century. Fossil-fuel resources will not limit carbon emissions during the 21st century (see Figure 7-5). The carbon in proven conventional oil and gas reserves is much less than the cumulative carbon emissions associated with stabilization of CO₂ at levels of 450 ppmv or higher.²¹ These resource data may imply a change in the energy mix and the introduction of new sources of energy during the 21st century. The choice of energy mix and associated technologies and investments -- either more in the direction of exploitation of unconventional oil and gas resources, or in the direction of non-fossil energy sources or fossil energy technology with carbon capture and storage -- will determine whether, and if so, at what level and cost, greenhouse concentrations can be stabilized.