Compared to the developing countries and those undergoing an economic transition, the GHG emissions in the developed countries originate increasingly from the energy used by households and other consumers for personal activities. Mitigation opportunities therefore lie increasingly in the area of personal transport, space conditioning, and other home use of energy, and in the energy used by the commercial sector, although opportunities exist in all sectors. Financial and income-related, social and behavioural, and institutional barriers thus become predominant in limiting the choice of mitigation technologies in these countries.

In the household sector, for instance, although a CFL offers a relatively short payback period, the large price differential between the CFL and an incandescent bulb poses a significant first-cost barrier to consumers. Most programmes to promote CFLs have focused on a subsidy to lower its first cost (Mills, 1993; Meyers, 1998). Raising the efficiency of other consumer appliances encounters barriers such as the relatively low energy cost, bundling of higher efficiency with other higher value attributes, and lack of information about energy consumption. Standards and labels are being implemented in several countries in order to overcome these barriers. While many communities and national governments have regulations for more efficient construction, rising affluence has increased the demand for homes with a larger floor area, which negates efficiency gains. Disincentives may also exist in the market structure, e.g., a building owner may not be interested in energy efficient designs if the user is responsible for paying for the energy used.

In the transport sector, manufacturers are producing cars that have more efficient engines and lower air resistance, but coupled with higher weight and more power (and other options), there has been little or no gain in vehicle fuel economy. Fuel economy is also not an important criteria in most purchasing decisions (see Section 5.4.3). The movement of households to suburban areas increases the distance traveled to work, and for leisure, and adds to a vehicle’s fuel consumption. The lock-in of transport into motorized private transport is an important barrier to new efficient forms of mass transport, while the well-established gasoline-based infrastructure is a barrier to the introduction of new less GHG-intensive fuels and associated technologies.

Energy efficiency and GHG-intensity in industry still vary widely among and within developed countries, suggesting the existence of barriers. Decision makers do not have sufficient information to evaluate GHG mitigation opportunities. The relative high transaction costs reduce the changes of innovative technologies. Output growth is slow or stagnant in the large energy-intensive industries. The resulting slow stock turnover has slowed the penetration of new GHG mitigation technologies in these industries. As industries improve their labour productivity, concentration on a few core activities has led to a lack of skilled personnel to evaluate and implement new technology.

The energy supply sector is undergoing changes in the regulatory structure in almost all developed countries. These changes may not all be conducive to the goal of GHG mitigation. Increasing profitability through reduction of capital costs may lead to less efficient power generation options, and reduce the penetration rate of generally capital intensive renewable energy technologies. In general, grid operators (i.e., utility companies) have put up high barriers against more efficient generation options like co-generation (CHP) through low buyback tariffs, high interconnection charges, or power quality demands (Box 5.5). Deregulation experiences have differed with respect to the treatment of co-generation and renewable energy.

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