Barriers to climate change mitigation are inherent to the process of development. Sustainable development in a participatory framework can minimize these barriers, but the inequitable distribution of income and wealth forms a core feature of barriers to effective implementation of any type of intervention, and those related to climate change are no exception. The poor in any society bear a disproportionate burden of the impact of externalities. Climate change affects them more, because they often lack the infrastructure to withstand its impacts. The poor also pay more as a proportion of their income for energy services, and often tend to use traditional fuels secured outside the formal market system. They are not able to access subsidized fuels for instance, because they do not have the collateral to access these fuels and the equipment to use them. Appropriate ways of financing would be one way to overcome such barriers, provided they explicitly account for the non-existence of markets for some segments of society. The issue of segmentation is valid for firms as well. Small and medium-sized firms for instance face information and market-structure barriers that well-structured large firms can readily overcome with the resources at their disposal.

Lifestyles, behaviour, and consumption patterns all evolve as societies develop within their own socio-cultural contexts. With the advent of global communications these factors are being increasingly influenced by changes that are taking place in societies residing thousands of miles away. The communication channels may be viewed as an opportunity to influence the manner in which tomorrow’s society might develop in countries where modern but resource-consumptive technologies and lifestyles have not taken root. Progress in achieving climate change mitigation will depend on how well the seeds of mitigative technological change can be planted and nurtured.

As a prelude to the more detailed sectoral discussion in Section 5.4, this section provides a general overview of the process of technological innovation, and the different sources of barriers to the diffusion of new technology and practices, as well as the policy opportunities that they represent. This section is organized by the following categories: prices, financing, trade and environment, market structure, institutional frameworks, information provision; and social, cultural and behavioural norms and aspirations. Within each of these areas, some of the barriers represent failures or imperfections in markets, policies, or other institutions that lie between the status-quo of the market potential and the possible achievement of the economic potential. Other barriers are aspects of institutions or social and cultural systems that economists may not characterize as market imperfections, but which nonetheless limit diffusion of GHG-efficient technology. These latter barriers separate the economic and socioeconomic potentials. Within each of the subsections below barriers and opportunities in both categories are discussed.

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