This chapter puts climate change mitigation and climate change mitigation policy in the broader context of development, equity, and sustainability. The ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC) “is to achieve … stabilization of greenhouse gas (GHG) concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a timeframe sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner” (Article 2). The UNFCCC goes on to specify principles that should guide this process: equity, common but differentiated responsibilities, precaution, cost-effectiveness, the right to sustainable development, and the avoidance of arbitrary restriction on international trade (Article 3). Previous Intergovernmental Panel on Climate Change (IPCC) assessment reports sought to lay the groundwork for policymakers pursuing the UNFCCC goals by comprehensively describing, cataloguing, and comparing technologies and policy instruments that could be used to achieve the mitigation of GHG emissions.

The attention accorded in the UNFCCC to sustainable development–including the recognition that “Parties have a right to, and should promote sustainable development” (Article 3.4)–has not, however, been matched by its treatment in previous IPCC assessment reports. As a result, the present assessment seeks to address this mismatch by placing policy evaluations in the broader context of development, equity, and sustainability as outlined in the Convention. The rising stature of development, equity, and sustainability in the discussion of mitigation is, indeed, entirely consistent with the overall evolution of the scope of the literature on climate change.

In fact, the analysis of climate change policies has evolved significantly between the preparation of the First Assessment Report (FAR; IPCC, 1991), the Second Assessment Report (SAR; IPCC, 1996), and Third Assessment Report (TAR) of the IPCC. In the late 1980s, for example, the focus of policy analysis was almost exclusively on climate change mitigation through emissions reduction. GHG emissions were modelled almost exclusively in terms of carbon dioxide (CO2) from energy use (Nordhaus and Yohe, 1983; Edmonds and Reilly, 1985); and emissions reductions were to be achieved primarily by increasing the prices of fossil fuels. Hence, it is hardly surprising that, with a few exceptions (e.g., Bradley and Williams, 1989; Parikh et al., 1991), carbon taxes were overwhelmingly the most commonly analyzed policy instrument. FAR (IPCC, 1991) documents the possible ramifications of a wide range of policy instruments, but it reports that carbon taxes are again the most fully analyzed in the literature. This report, by way of contrast, demonstrates a significant enhancement in the capacity of policy analysts to consider the sources and sinks of multiple gases as well as a broader array of policy instruments to curtailing the emission of these gases into the atmosphere.

Also, little consideration was given in FAR to policies designed to enhance adaptation to climate change impacts. In TAR, though, adaptation has become a major focus of the Working Group II (WGII) report (IPCC, 2001). At the beginning of the 1990s, assessments of the capabilities of countries to achieve emissions reductions were almost exclusively based on estimates of their fossil fuel consumption. With a few exceptions (e.g., Grubb, 1991; Rayner, 1993) no explicit consideration was given to social, cultural, political, institutional, or decision-making constraints on the capacity of governments to implement climate change policies.

Consistent with the state of the policy literature on climate change, FAR (IPCC, 1991) also made no attempt to address issues of equity. Prior to the publication of Global Warming in an Unequal World (Agarwal and Narain, 1991a), consideration of the fairness of climate change policies (both among and within countries) received little attention from analysts and policymakers (for exceptions see Grubb, 1989; Kasperson and Dow, 1991; Parikh et al., 1991). The IPCC Second Assessment Report WGIII (IPCC WG III, 1996) did, however, mention the need to extend the focus of analysis and assessment into areas that included issues not only of equity and fairness, but also of development and sustainability. Some of the studies available then did note the distributional effects of alternative policy designs and targets; and some did trace other effects into the domains of development and sustainability. The point here is not that earlier work ignored these broader issues, but that this report begins the process of making them more central in the assessment of the existing policy analyses. This report begins the task of integrating technology and policy characterizations into alternative development scenarios and policy decision-frameworks that are broadly conceived. In the same spirit, this chapter seeks to locate the work of WGIII in a broader context of development, equity, and sustainability. In the process, we draw on several themes (elaborated in subsequent chapters) to identify opportunities to enhance the capacity of regions, countries, and communities to mitigate GHG emissions while simultaneously pursuing their sustainable development goals. Neither the greenhouse gas mitigation nor the sustainable development initiative, however, eliminates the need to conduct efficiency-based assessments of the opportunity costs of mitigation and/or the enhancement of the capacity to mitigate. Instead, climate change and sustainable development both simply expand the number of objectives against which these costs need to be measured.

The expansion of IPCC’s scope in this WGIII report complements that of WGII (IPCC, 2001), which addresses the impacts of continued atmospheric accumulation of GHGs and the adaptive capacity of countries to adjust to the consequences of that accumulation. The analogous concept of mitigative capacity (Yohe, in press) is offered in Section 1.5 as one tool with which policymakers and researchers alike might integrate insights drawn from the domains of cost-effectiveness, equity, and sustainability into their understanding of mitigation. Drawing attention to concepts like mitigative capacity also allows the reader to approach the complexity of mitigation within a framework that mirrors the emphasis placed on adaptive capacity by the TAR WGII Report.

The expansion of the range and scope of IPCC policy analysis, just described, can be understood as a gradual broadening of the types and extent of uncertainties that analysts have been willing and able to address. A graphic representation of this expansion of interest and capability (Figure 1.1) shows that the policy sciences have made significant advances since IPCC FAR. This figure simply depicts different perspectives that have been employed to examine climate policy issues and the stage at which they were incorporated into the IPCC process. Progression through the IPCC assessments displayed in Figure 1.1 represents expansions in the scope of climate policy analyses since 1980. There is no presumption that any particular framework for analysis is most appropriate at any level. The important changes are primarily in the types of questions being asked and the kinds of information being sought. In practice, the literature has expanded to add new issues and has subsumed rather than discarded the analyses of the initial issues. With each assessment, IPCC has added to the necessary tool set without obviating the need for the tools developed in the earlier assessments.

The first concern of policy analysis to be included in IPCC assessments is labelled “Cost-effectiveness” in Figure 1.1. It represents the field of conventional climate policy analysis that is well represented in the First through to the Third Assessments. These analyses are generally driven directly or indirectly by the question of what is the most cost-effective amount of mitigation for the global economy starting from a particular baseline GHG emissions scenario, and reflecting a specific set of socioeconomic scenarios. Within this framework, important issues include measuring the performance of various technologies and the removal of barriers (such as existing subsidies) to the implementation of the candidate policies most likely to contribute to emissions reductions. In a sense, the focus of such analysis is to identify an efficient pathway through the interactions of mitigation policies and economic development, in some cases conditioned by considerations of equity and sustainability, but not primarily guided by them. At this level, IPCC policy analysis has almost always taken the existing institutions and tastes of individuals as given; such assumptions might be valid for a decade or two, but may become more questionable over many decades.¹

By introducing the issue of equity, SAR (IPCC, 1996) broadened the IPCC policy discourse; a process reflected by “Equity” in Figure 1.1. The impetus for this expansion in the scope of the discourse was to include considerations not simply of the impacts of climate change and mitigation policies on global welfare as a whole, but also of the effects of climate change and mitigation policies on existing inequalities among and within nations. The literature on equity and climate change has advanced considerably since SAR, but there is no consensus on what constitutes fairness. Once equity issues were introduced into the IPCC assessment agenda, though, they became important components in defining the search for efficient emissions mitigation pathways. The considerable literature that indicates how environmental policies could be hampered or even blocked by those who considered them unfair became relevant (National Academy of Engineering, 1986; Rayner and Cantor, 1987; Grubb, 1989; Weiss, 1989; Kasperson and Dow, 1991). In light of these results, it became clear how and why any widespread perception that a mitigation strategy is unfair would likely engender opposition to that strategy, perhaps to the extent of rendering it non-optimal (or even infeasible). Some cost-effectiveness analyses had, in fact, laid the groundwork for applying this literature by demonstrating the sensitivity of some equity measures to policy design, national perspective, and regional context. Indeed, cost-effectiveness analyses had even highlighted similar sensitivities for other measures of development and sustainability.

Throughout this evolution, though, the historical model of societies that industrialized in the nineteenth and twentieth centuries served as the central notion of what constitutes development in both the cost-effectiveness and equity perspectives. According to some analysts (e.g., Simon and Kahn, 1984; Beckerman, 1996) this path represents the best model for global prosperity. However, a growing parallel literature recognizes the importance of diverse development pathways in achieving an environmentally and socioeconomically sustainable world (see Section 1.4). This insight can serve as the basis of a third analytical perspective–a perspective represented in Figure 1.1 by “Global Sustainability”. As yet, however, analyses of such alternative development pathways remain largely unrealized within the framework of IPCC. Still, the first steps in this direction can be detected throughout this volume.

The above description of three complementary perspectives on climate change mitigation and the broad societal goals of development, equity, and sustainability bears elaboration. The rest of this chapter can be seen as a triptych, in which each section presents a particular perspective on climate change mitigation–motivated respectively by considerations of cost-effectiveness, equity, and sustainability. However, we also describe how each of the perspectives has attempted to address and incorporate concerns that lie beyond their initial starting points. For example, Section 1.2 details the Cost-effectiveness perspective; however, its two concluding sections, (1.2.5 and 1.2.6) describe how this approach has addressed concerns of equity and sustainability. Similarly, Section 1.3 is entitled “Equity and Sustainable Development” in recognition of the fact that writers examining the issue of climate change from a vantage point of global equity have generally sought to explore how developing countries could pursue their sustainable development goals. In the penultimate sub-section (1.3.4) of this section, we examine the concept of sustainable development and describe its relationship to cost-effectiveness, efficiency, and sustainability. Finally, the theme of Section 1.4 is Global sustainability; and its two main sub-sections (1.4.2 and 1.4.3) discuss issues of resource efficiency (de-coupling growth from resource flows), and values and norms that include issues of equity.

In other words, instead of forcing the literature that describes the relationship between climate change mitigation and development, equity, and sustainability into a single framework, we have tried to bring out both the commonalities and differences between alternative approaches and analytical frameworks. All three classes of analyses look at the relationship of climate change mitigation with all three goals–development, equity, and sustainability–albeit in different and often highly complementary ways. Nevertheless, they frame the issues differently, focus on different sets of causal relationships, use different tools of analysis, and often come to somewhat different conclusions. Accordingly, they are likely to be useful to decision makers in different ways.

Assessing the climate challenge with a sustainable development perspective immediately reveals that countries differ in ways that have dramatic implications for baselines and the range of mitigation options that can be considered. Moreover, although models centred on Organization of Economic Co-operation and Development (OECD) countries may give helpful first-order insights into the efficacy of global policy interventions, the underlying assumptions may make such models less useful when the heterogeneity of nations is incorporated fully. Recognition of this heterogeneity may lead to a different range of policy options than considered likely thus far, and may ultimately feed back into policy design for Annex I countries. Recognizing heterogeneity among countries reveals, in short, differences in the capacities of different sectors, which may also enhance appreciation of what can be done by non-state actors as well as governments to build their mitigative capacity. The expansion of analytic perspectives also represents the increasing complexity of issues selected for analytic focus. On the left-hand side of Figure 1.1, complexity refers primarily to the analytical challenges presented by individual technologies (such as fuel cells or photovoltaics) or specific policy instruments (such as carbon taxes or tradable emissions permits). Moving from left to right across the figure, such complexities become compounded, first by interactions among technologies and policy instruments, then among mitigation and adaptation issues, and, finally among climate change issues narrowly defined and a wide range of environmental and socioeconomic issues. Finally, linkages and interactions with policy objectives for the development of the global economy come into the picture.

A major part of the complexity that must be dealt with in formulating climate policies is the uncertainties about how the world and the climate system will evolve without new policies, about what policies will be implemented now and in the future, and about the efficacy of those policies. The economist Frank Knight (1921) introduced a fundamental distinction between “risk” and “uncertainty”, ² whereby risk refers to cases for which the probable outcomes are predicted through well-established theories and methods, and with reliable data (e.g., the radiative forcing of a tonne of CO₂ or the efficiency of a gas turbine); and uncertainty to situations in which theories and methods are widely accepted, but the appropriate data are not available or are fragmentary, and probabilities and outcomes can be assessed subjectively by relevant experts. In this situation, formal decision-analytic tools can be quite useful, but only if carefully and systematically applied (Savage, 1954; Raiffa, 1968; Howard, 1980, 1988: Howard and Matheson, 1984). There is, however, a third state in the climate context, which may be called decision making under deep uncertainty (sometimes also referred to as “secondary” uncertainties; see Fischbeck, 1991). For deep uncertainty, it is not possible to specify the behaviour of major components of a system because of the absence of or contradictions in data, methods, and/or theory. Decision-analytic methods can still be applied, but the process of eliciting subjective probabilities is much more complicated. The experts must factor in assessments about the likelihood of each of the alternative theories being correct, on top of assessments of the probabilities for alternative parameter values within the methods suggested by that theory. In addition, the experts need to provide some estimate of the uncertainty in outcomes caused by factors not incorporated into any existing theory. For example, there may be discontinuities in the response of the climate or ecological systems that occur at as yet unrecognized thresholds.

Since they have different starting points and objectives, the three approaches to climate policy analysis have exhibited somewhat different approaches to handling uncertainty. Applications of the cost-effectiveness approach have generally ignored uncertainty completely or stayed fairly close to the traditional decision analysis approach, focusing on incorporating a limited number of subjectively accessed probabilities on key uncertainties. Applications of the equity approach have been focused on the risks climate change and climate change policies might pose to the “most vulnerable” elements of the global population and have generally employed sensitivity analyses to accomplish this objective. Studies done from the sustainability perspective have more often than not focused on the robustness of policies (and especially those designed to build climate mitigation and adaptation possibilities) across wide ranges of values for uncertain inputs and parameters.

The rest of this chapter elaborates each of the three analytic perspectives shown in Figure 1.1. The motivation for this elaboration is threefold. First, it is to help the reader situate each perspective in the evolution of policy science as reflected in IPCC assessments. Second, it is designed to situate the issue of GHG emissions mitigation in the context of climate policy more broadly. Third, it seeks to locate climate policy in a broader context of concerns about development, equity, and sustainability. However, it must be emphasized that Figure 1.1 does not represent any sort of linear evolution in which one kind of analytic tool or policy focus replaces a predecessor. Rather than a hierarchy of approaches, the evolution of perspectives suggests a portfolio approach both to assessment and policy choice. Just like a personal investment portfolio, a rational global climate policy portfolio contains a flexible mix of diverse commitments consistent with different development goals, and to protect against different contingencies at various levels of uncertainty about the future.

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