WG III Mitigation - Technical Summary

Climate Change 2001: Mitigation

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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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