4.3 Mitigation options

Both bottom-up and top-down studies^[21] indicate that there is high agreement and much evidence of substantial economic potential^[21] for the mitigation of global GHG emissions over the coming decades that could offset the projected growth of global emissions or reduce emissions below current levels. {WGIII 11.3, SPM}

Figure 4.1 compares global economic mitigation potential in 2030 with the projected emissions increase from 2000 to 2030. Bottom-up studies suggest that mitigation opportunities with net negative costs^[22] have the potential to reduce emissions by about 6 GtCO₂-eq/yr in 2030. Realising these requires dealing with implementation barriers. The economic mitigation potential, which is generally greater than the market mitigation potential, can only be achieved when adequate policies are in place and barriers removed.^[21] {WGIII 11.3, SPM}

Comparison between global economic mitigation potential and projected emissions increase in 2030

Figure 4.1. Global economic mitigation potential in 2030 estimated from bottom-up (Panel a) and top-down (Panel b) studies, compared with the projected emissions increases from SRES scenarios relative to year 2000 GHG emissions of 40.8 GtCO₂-eq (Panel c). Note: GHG emissions in 2000 are exclusive of emissions of decay of above-ground biomass that remains after logging and deforestation and from peat fires and drained peat soils, to ensure consistency with the SRES emissions results. {WGIII Figures SPM.4, SPM.5a, SPM.5b}

Sectoral estimates of economic mitigation potential and marginal costs derived from bottom-up studies corrected for double counting of mitigation potential are shown in Figure 4.2. While top-down and bottom-up studies are in line at the global level, there are considerable differences at the sectoral level. {WGIII 11.3, SPM}

Economic mitigation potentials by sector in 2030 estimated from bottom-up studies

Figure 4.2. Estimated economic mitigation potential by sector and region using technologies and practices expected to be available in 2030. The potentials do not include non-technical options such as lifestyle changes. {WGIII Figure SPM.6}

Notes:

a) The ranges for global economic potentials as assessed in each sector are shown by vertical lines. The ranges are based on end-use allocations of emissions, meaning that emissions of electricity use are counted towards the end-use sectors and not to the energy supply sector.

b) The estimated potentials have been constrained by the availability of studies particularly at high carbon price levels.

c) Sectors used different baselines. For industry the SRES B2 baseline was taken, for energy supply and transport the World Energy Outlook (WEO) 2004 baseline was used; the building sector is based on a baseline in between SRES B2 and A1B; for waste, SRES A1B driving forces were used to construct a waste-specific baseline; agriculture and forestry used baselines that mostly used B2 driving forces.

d) Only global totals for transport are shown because international aviation is included.

e) Categories excluded are non-CO₂ emissions in buildings and transport, part of material efficiency options, heat production and cogeneration in energy supply, heavy duty vehicles, shipping and high-occupancy passenger transport, most high-cost options for buildings, wastewater treatment, emission reduction from coal mines and gas pipelines, and fluorinated gases from energy supply and transport. The underestimation of the total economic potential from these emissions is of the order of 10 to 15%.

No single technology can provide all of the mitigation potential in any sector. Table 4.2 lists selected examples of key technologies, policies, constraints and opportunities by sector. {WGIII SPM}

Future energy infrastructure investment decisions, expected to total over US$20 trillion^[23] between 2005 and 2030, will have long-term impacts on GHG emissions, because of the long lifetimes of energy plants and other infrastructure capital stock. The widespread diffusion of low-carbon technologies may take many decades, even if early investments in these technologies are made attractive. Initial estimates show that returning global energy-related CO₂ emissions to 2005 levels by 2030 would require a large shift in the pattern of investment, although the net additional investment required ranges from negligible to 5 to 10%. {WGIII 4.1, 4.4, 11.6, SPM}

While studies use different methodologies, there is high agreement and much evidence that in all analysed world regions near-term health co-benefits from reduced air pollution, as a result of actions to reduce GHG emissions, can be substantial and may offset a substantial fraction of mitigation costs. {WGIII 11.8, SPM}

Energy efficiency and utilisation of renewable energy offer synergies with sustainable development. In least developed countries, energy substitution can lower mortality and morbidity by reducing indoor air pollution, reduce the workload for women and children and decrease the unsustainable use of fuelwood and related deforestation. {WGIII 11.8, 11.9, 12.4}

Literature since the TAR confirms with high agreement and medium evidence that there may be effects from Annex I countries’ action on the global economy and global emissions, although the scale of carbon leakage remains uncertain. {WGIII 11.7, SPM}

Fossil fuel exporting nations (in both Annex I and non-Annex I countries) may expect, as indicated in the TAR, lower demand and prices and lower GDP growth due to mitigation policies. The extent of this spillover depends strongly on assumptions related to policy decisions and oil market conditions. {WGIII 11.7, SPM}

Critical uncertainties remain in the assessment of carbon leakage. Most equilibrium modelling supports the conclusion in the TAR of economy-wide leakage from Kyoto action in the order of 5 to 20%, which would be less if competitive low-emissions technologies were effectively diffused. {WGIII 11.7, SPM}

There is also high agreement and medium evidence that changes in lifestyle and behaviour patterns can contribute to climate change mitigation across all sectors. Management practices can also have a positive role. {WGIII SPM}

Examples that can have positive impacts on mitigation include changes in consumption patterns, education and training, changes in building occupant behaviour, transport demand management and management tools in industry. {WGIII 4.1, 5.1, 6.7, 7.3, SPM}

Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. {WGIII SPM}

An effective carbon-price signal could realise significant mitigation potential in all sectors. Modelling studies show that global carbon prices rising to US$20-80/tCO₂-eq by 2030 are consistent with stabilisation at around 550ppm CO₂-eq by 2100. For the same stabilisation level, studies since the TAR that take into account induced technological change may lower these price ranges to US$5-65/tCO₂-eq in 2030.^[24] {WGIII 3.3, 11.4, 11.5, SPM}

There is high agreement and much evidence that a wide variety of national policies and instruments are available to governments to create the incentives for mitigation action. Their applicability depends on national circumstances and an understanding of their interactions, but experience from implementation in various countries and sectors shows there are advantages and disadvantages for any given instrument. {WGIII 13.2, SPM}

Four main criteria are used to evaluate policies and instruments: environmental effectiveness, cost effectiveness, distributional effects including equity, and institutional feasibility. {WGIII 13.2, SPM}

General findings about the performance of policies are: {WGIII 13.2, SPM}

• Integrating climate policies in broader development policies makes implementation and overcoming barriers easier.
• Regulations and standards generally provide some certainty about emission levels. They may be preferable to other instruments when information or other barriers prevent producers and consumers from responding to price signals. However, they may not induce innovations and more advanced technologies.
• Taxes and charges can set a price for carbon, but cannot guarantee a particular level of emissions. Literature identifies taxes as an efficient way of internalising costs of GHG emissions.
• Tradable permits will establish a carbon price. The volume of allowed emissions determines their environmental effectiveness, while the allocation of permits has distributional consequences. Fluctuation in the price of carbon makes it difficult to estimate the total cost of complying with emission permits.
• Financial incentives (subsidies and tax credits) are frequently used by governments to stimulate the development and diffusion of new technologies. While economic costs are generally higher than for the instruments listed above, they are often critical to overcome barriers.
• Voluntary agreements between industry and governments are politically attractive, raise awareness among stakeholders and have played a role in the evolution of many national policies. The majority of agreements have not achieved significant emissions reductions beyond business as usual. However, some recent agreements, in a few countries, have accelerated the application of best available technology and led to measurable emission reductions.
• Information instruments (e.g. awareness campaigns) may positively affect environmental quality by promoting informed choices and possibly contributing to behavioural change, however, their impact on emissions has not been measured yet.
• Research, development and demonstration (RD&D) can stimulate technological advances, reduce costs and enable progress toward stabilisation.

Some corporations, local and regional authorities, NGOs and civil groups are adopting a wide variety of voluntary actions. These voluntary actions may limit GHG emissions, stimulate innovative policies and encourage the deployment of new technologies. On their own, they generally have limited impact on national- or regional-level emissions. {WGIII 13.4, SPM}