Studies examined in the TAR suggest substantial technological and other opportunities for lowering mitigation costs. National mitigation responses to climate change can be more effective if deployed as a portfolio of policy instruments to limit or reduce net greenhouse gas emissions. The costs of mitigation are strongly affected by development paths, with those paths involving substantial increases in greenhouse gas emissions requiring more mitigation to reach a stabilization target, and hence higher costs. These costs can be substantially reduced or even turned into net benefits with a portfolio of policy instruments (including those that help to overcome barriers) to the extent that policies can exploit "no-regrets" opportunities in the following areas:

• Technological options: Technological options may achieve global emissions reductions of 1.9 to 2.6 Gt C_eq yr^-1 by year 2010 and 3.6 to 5.0 Gt C_eq yr^-1 by year 2020. Half of these reductions may be realized with one component of their economic cost (net capital, operating, and maintenance costs) with direct benefits exceeding direct costs, and the other half with that component of their economic cost ranging from US$0 to US$100 per t C_eq. ²⁶ Depending on the emissions scenario, global emissions could be reduced below year 2000 levels over the 2010 to 2020 time frame. Key uncertainties are the identification, extent, and nature of any barriers that impede adoption of promising low-emission technologies, and the estimation of the costs of overcoming the barriers.
• Ancillary benefits: Depending on factors (such as location of the greenhouse gas emissions, the prevailing local climate, and the population density, composition, and health) the magnitude of the ancillary benefits of mitigation may be comparable to the costs of the mitigating policies and measures. Key uncertainties are the magnitude and location of these benefits involving the scientific assessment and valuation of health risks of air pollution, particularly those involving fine aerosols and particles.
• Double dividends: Instruments (such as taxes or auctioned permits) provide revenues to the government. If used to finance reductions in existing distortionary taxes ("revenue recycling"), these revenues reduce the economic cost of achieving greenhouse gas reductions. The magnitude of this offset depends on the existing tax structure, type of tax cuts, labor market conditions, and method of recycling. Under some circumstances, it is possible that the economic benefits may exceed the costs of mitigation. Key uncertainties regarding the overall net costs of mitigation vary between countries, depending on the existing tax structure, the extent of the distortion, and the type of tax cuts that are acceptable.
  

Modeling studies show that emissions trading reduces costs of mitigation for those participating in the trading. Global modeling studies, with results depending strongly upon assumptions, project that costs of mitigation based on Kyoto targets are likely to be reduced by full carbon-permit trading within the Annex B²⁷ group of countries. Annex I OECD²⁸ countries may expect aggregate costs to be reduced by about half through full permit trading. Annex I economies in transition are projected to be unaffected or to gain several percent increase in GDP. Oil-exporting, non-Annex I countries may also expect similar reductions in costs under such trading. The aggregate effects of trading are expected to be positive for other non-Annex I countries. Those countries that may expect a loss or gain without Annex I trading may expect a smaller change with trading. A key uncertainty is the extent of the underlying costs, which vary widely across countries, and how these cost estimates will be changed (a) when methods are improved and (b) when some of the assumptions of the models are relaxed. Such assumptions are concerned with:

• Allowance for exemptions in the emission-permit trading in concert with other policies and measures
• Consideration of various market imperfections
• Allowance for induced technical change
• Inclusion of ancillary benefits
• Opportunities for double dividends
• Inclusion of policies for non-CO₂ greenhouse gases and non-energy sources of all greenhouse gases (e.g., CH₄ from agriculture)
• Offsets from sinks.

Significant progress has been made in the TAR in many aspects of the knowledge required to understand climate change and the human response to it. However, there remain important areas where further work is required, in particular:

• The detection and attribution of climate change
• The understanding and prediction of regional changes in climate and climate extremes
• The quantification of climate change impacts at the global, regional, and local levels
• The analysis of adaptation and mitigation activities
• The integration of all aspects of the climate change issue into strategies for sustainable development
• Comprehensive and integrated investigations to support the judgment as to what constitutes "dangerous anthropogenic interference with the climate system."