5.3 Sector- and Technology-specific Barriers and Opportunities
The following sections describe barriers and opportunities particular to each
mitigation sector (see also Table TS.2).
Buildings: The poor in every country are affected far more by barriers
in this sector than the rich, because of inadequate access to financing, low
literacy rates, adherence to traditional customs, and the need to devote a higher
fraction of their income to satisfy basic needs, including fuel purchases. Other
barriers in this sector are lack of skills and social barriers, misplaced incentives,
market structure, slow stock turnover, administratively set prices, and imperfect
information. Integrated building design for residential construction could lead
to energy saving by 40%-60%, which in turn could reduce the cost of living (Section
3.3.4).
Policies, programmes, and measures to remove barriers and reduce energy costs,
energy use, and carbon emissions in residential and commercial buildings fall
into ten general categories: voluntary programmes, building efficiency standards,
equipment efficiency standards, state market transformation programmes, financing,
government procurement, tax credits, energy planning (production, distribution,
and end-use), and accelerated R&D. Affordable credit financing is widely
recognized in Africa as one of the critical measures to remove the high first-cost
barrier. Poor macroeconomic management captured by unstable economic conditions
often leads to financial repression and higher barriers. As many of several
obstacles can be observed simultaneously in the innovation chain of an energy-efficient
investment or organizational measure, policy measures usually have to be applied
as a bundle to realize the economic potential of a particular technology.
Transport: The car has come to be widely perceived in modern societies
as a means of freedom, mobility and safety, a symbol of personal status and
identity, and as one of the most important products in the industrial economy.
Several studies have found that people living in denser and more compact cities
rely less on cars, but it is not easy, even taking congestion problems into
account, to motivate the shift away from suburban sprawl to compact cities as
advocated in some literature. An integrated approach to town and transport planning
and the use of incentives are key to energy efficiency and saving in the transport
sector. This is an area, where lock-in effects are very important: when land-use
patterns have been chosen there is hardly a way back. This represents an opportunity
in particular for the developing world.
Transport fuel taxes are commonly used, but have proved very unpopular in some
countries, especially where they are seen as revenue-raising measures. Charges
on road users have been accepted where they are earmarked to cover the costs
of transport provision. Although trucks and cars may be subject to different
barriers and opportunities because of differences in their purpose of use and
travel distance, a tax policy that assesses the full cost of GHG emissions would
result in a similar impact on CO2 reductions in road transport. Several
studies have explored the potential for adjusting the way existing road taxes,
licence fees, and insurance premiums are levied and have found potential emissions
reductions of around 10% in OECD countries. Inadequate development and provision
of convenient and efficient mass transport systems encourage the use of more
energy consuming private vehicles. It is the combination of policies protecting
road transport interest, however, that poses the greatest barrier to change,
rather than any single type of instrument.
New and used vehicles and/or their technologies mostly flow from the developed
to developing countries. Hence, a global approach to reducing emissions that
targets technology in developed countries would have a significant impact on
future emissions from developing countries.
Industry: In industry, barriers may take many forms, and are determined
by the characteristics of the firm (size and structure) and the business environment.
Cost-effective energy efficiency measures are often not undertaken as a result
of lack of information and high transaction costs for obtaining reliable information.
Capital is used for competing investment priorities, and is subject to high
hurdle rates for energy efficiency investments. Lack of skilled personnel, especially
for small and medium-sized enterprises (SMEs), leads to difficulties installing
new energy-efficient equipment compared to the simplicity of buying energy.
Other barriers are the difficulty of quantifying energy savings and slow diffusion
of innovative technology into markets, while at the same time firms typically
underinvest in R&D, despite the high rates of return on investment.
A wide array of policies to reduce barriers, or the perception of barriers,
has been used and tested in the industrial sector in developed countries, with
varying success rates. Information programmes are designed to assist energy
consumers in understanding and employing technologies and practices to use energy
more efficiently. Forms of environmental legislation have been a driving force
in the adoption of new technologies. New approaches to industrial energy efficiency
improvement in developed countries include voluntary agreements (VAs).
In the energy supply sector virtually all the generic barriers cited in Section
5.2 restrict the introduction of environmentally sound technologies and
practices. The increasing deregulation of energy supply, while making it more
efficient, has raised particular concerns. Volatile spot and contract prices,
short-term outlook of private investors, and the perceived risks of nuclear
and hydropower plants have shifted fuel and technology choice towards natural
gas and oil plants, and away from renewable energy, including - to a lesser
extent - hydropower, in many countries.
Co-generation or combined production of power and heat (CHP) is much more efficient
than the production of energy for each of these uses alone. The implementation
of CHP is closely linked to the availability and density of industrial heat
loads, district heating, and cooling networks. Yet, its implementation is hampered
by lack of information, the decentralized character of the technology, the attitude
of grid operators, the terms of grid connection, and a lack of policies that
foster long-term planning. Firm public policy and regulatory authority is necessary
to install and safeguard harmonized conditions, transparency, and unbundling
of the main power supply functions.
Agriculture and Forestry: Lack of adequate capacity for research and
provision of extension services will hamper the spread of technologies that
suit local conditions, and the declining Consultative Group on International
Agricultural Research (CGIAR) system has exacerbated this problem in the developing
world. Adoption of new technology is also limited by small farm size, credit
constraints, risk aversion, lack of access to information and human capital,
inadequate rural infrastructure and tenurial arrangements, and unreliable supply
of complementary inputs. Subsidies for critical inputs to agriculture, such
as fertilizers, water supply, and electricity and fuels, and to outputs in order
to maintain stable agricultural systems and an equitable distribution of wealth
distort markets for these products.
Measures to address the above barriers include:
- The expansion of credit and savings schemes;
- Shifts in international research funding towards water-use efficiency, irrigation
design, irrigation management, adaptation to salinity, and the effect of increased
CO2 levels on tropical crops;
- The improvement of food security and disaster early warning systems;
- The development of institutional linkages between countries; and
- The rationalization of input and output prices of agricultural commodities,
taking DES issues into consideration.
The forestry sector faces land-use regulation and other macroeconomic policies
that usually favour conversion to other land uses such as agriculture, cattle
ranching, and urban industry. Insecure land tenure regimes and tenure rights
and subsidies favouring agriculture or livestock are among the most important
barriers for ensuring sustainable management of forests as well as sustainability
of carbon abatement. In relation to climate change mitigation, other issues,
such as lack of technical capability, lack of credibility about the setting
of project baselines, and monitoring of carbon stocks, poses difficult challenges.
Waste Management: Solid waste and wastewater disposal and treatment
represent about 20% of human-induced methane emissions. The principal barriers
to technology transfer in this sector include limited financing and institutional
capability, jurisdictional complexity, and the need for community involvement.
Climate change mitigation projects face further barriers resulting from unfamiliarity
with CH4 capture and potential electricity generation, unwillingness
to commit additional human capacity for climate mitigation, and the additional
institutional complexity required not only by waste treatment but also byenergy
generation and supply. The lack of clear regulatory and investment frameworks
can pose significant challenges for project development.
To overcome the barriers and to avail the opportunities in waste management,
it is necessary to have a multi-project approach, the components of which include
the following :
- Building databases on availability of wastes, their characteristics, distribution,
accessibility, current practices of utilization and/or disposal technologies,
and economic viability;
- Institutional mechanism for technology transfer though a co-ordinated programme
involving the R&D institutions, financing agencies, and industry; and
- Defining the role of stakeholders including local authorities, individual
householders, industries, R&D institutions, and the government.
Regional Considerations: Changing global patterns provide an opportunity
for introducing GHG mitigation technologies and practices that are consistent
with DES goals. A culture of energy subsidies, institutional inertia, fragmented
capital markets, vested interests, etc., however, presents major barriers to
their implementation, and may be particular issues in developing and EIT countries.
Situations in these two groups of countries call for a more careful analysis
of trade, institutional, financial, and income barriers and opportunities, distorted
prices, and information gaps. In the developed countries, other barriers such
as the current carbon-intensive lifestyle and consumption patterns, social structures,
network externalities, and misplaced incentives offer opportunities for intervention
to control the growth of GHG emissions. Lastly, new and used technologies mostly
flow from the developed to developing and transitioning countries. A global
approach to reducing emissions that targets technology that is transferred from
developed to developing countries could have a significant impact on future
emissions.
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