Working Group III: Mitigation

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9.1 Introduction and Progress since the Second Assessment Report

In the Second Assessment Report (SAR) and in the literature, the benefits and costs of mitigation have largely been measured in terms of macro concepts such as gross domestic product (GDP) or total welfare; sectoral effects have not been considered as a central issue. This chapter considers these sectoral implications. For a definition of co-benefits and ancillary benefits and costs, see Chapter 7; for the macroeconomic effects of mitigation policies, see Chapter 8.

The definitions of sectors adopted in this chapter is that of the UN System of National Accounts (1993 ISIC). This is an internationally agreed set of definitions, conventions, and accounts which includes the division of the macro economy into industrial sectors, such as manufacturing. The data for sectoral economic models are usually arranged according to these accounts, and the results of the models reported below (in as much as they provide a comprehensive sectoral disaggregation of the macroeconomic effects) will follow these definitions. However, the energy sector is further subdivided in this chapter, since the mitigation effects are so important and distinct for the component industries, namely coal, oil and gas, and electricity.

When assessing the sectoral responses to mitigation policies and measures, a distinction can be made between commercial firms (partnerships or corporations) and persons (such as car drivers and home-owners) as decision makers. Firms are generally expected to be more price-responsive in their fuel use, because of better access to capital, information, and technologies, while persons generally value lifestyles more highly in their fuel use decisions. Although “sectors” are largely taken to be industrial contributors to GDP, households and private motorists are also responsible for large amounts of greenhouse gas (GHG) emissions and are also covered in this chapter.

The effects of mitigation can be divided into the effects in the sector or region that undertake the mitigation policies and measures and the further, consequential effects, or spillovers, on other sectors or regions. More investment in energy-efficient equipment or in technology to develop a renewable source of energy may lead to technological spillovers on other sectors. Such spillovers are considered below.

This chapter continues with reviews of results from multisectoral studies (9.2.1), followed by those on each major sector in turn (coal, petroleum and gas, non-fossil-based energy, agriculture and forestry, manufacturing, construction, transport, service industries, and households in Sections 9.2.2 to 9.2.10). Section 9.3 reviews the literature on sectoral spillover effects of mitigation in one country or region on the rest of the world. Ancillary benefits associated with particular sectors or with sectoral mitigation policies are covered in Sections 9.2.2 to 9.2.10. Section 9.4 considers why the macro and sectoral studies come to different conclusions. Section 9.5 suggests areas for further research.

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