12.2.4.6 Mainstreaming climate change into development choices: Setting priorities
As highlighted in Sections 12.2.4.1 to 12.2.4.5, development policies in various sectors can have strong impacts on GHG emissions. The operational question is how to harness that potential. How can climate change mitigation considerations be mainstreamed into development policies.
Mainstreaming means that development policies, programmes and/or individual actions that otherwise would not have taken climate change mitigation into consideration explicitly include these when making development choices. This makes development more sustainable.
The ease or difficulty with which mainstreaming is accomplished will depend on both the mitigation technology or practice, and the underlying development path. No-regrets energy efficiency options, for instance, are likely to be easier to implement (and labelled as climate change mitigation actions) than others that have higher direct cost, require coordination among stakeholders, and/or require a trade-off against other environmental, and social and economic benefits. Weighing other development benefits against climate benefits will be a key basis for choosing development sectors for mainstreaming climate change considerations. In some cases, it may even be rational to disregard climate change considerations because of an action’s other development benefits (Smith, 2002).
Development policies, such as electricity privatization, can increase emissions if they result in construction of natural gas power plants in place of hydroelectric power for instance, but they can reduce emissions if coal power plants are not built. Judicious and informed choices will be needed when pursuing development policies in order to ensure that GHG emissions are reduced and not increased (see above). This section considers which sectors should receive priority for mainstreaming climate change mitigation into development choices; what sectors are better off not pursuing mainstreaming; and which stakeholders might have a bigger stake and voice in mainstreaming. The next section considers concrete ways to mainstream mitigation considerations into development choices.
Prioritizing requires that the current and future associated emissions of the targeted sector and the mitigation potential of the non-climate sustainable development action be estimated. Policy-makers can then weigh the emissions reduction potential against other sustainability aspects of the action in choosing the appropriate policy to implement. In order to implement such an approach, empirical analyses are needed to estimate future associated emissions and current and future mitigation potential of development actions. Few, if any, global analyses provide complete guidance of this type. In light of the lack of empirical analyses, associated emissions for selected sectors in which development actions may be pursued are presented. This provides an initial guide in ranking sustainable development actions. A more complete analysis is needed, however, which would require the estimation of future associated emissions, and current and future mitigation potential of sustainable development actions.
Selected examples of CO2 emissions associated with sectors where sustainable development actions could be implemented are presented in Table 12.3. These are described below:
Emissions associated with selected sectors:
- Macro-economy: Through fiscal tax and subsidy policies, public finance can play an important role in reducing emissions. Rational energy pricing based on long-run-marginal-cost principle can level the playing field for renewables, increase the spread of energy efficient and renewable energy technologies, improve the economic viability of utility companies, and can reduce GHG emissions. Non-climate taxes/subsidies and other fiscal instruments can impact the entire global fossil fuel emissions of CO2, which amounted to about 51 GtCO2-eq in 2004. Those that directly reduce fossil fuel use could be easily relabelled and mainstreamed as climate taxes, but others, for example a tax on water use, would need to be evaluated for their fossil fuel impacts and climate benefits.
- Forestry: Adoption of forest conservation and sustainable forest management practices can contribute to conservation of biodiversity, watershed protection, rural employment generation, increased incomes to forest dwellers and carbon sink enhancement. The forestry sector emissions show a high and low range to signal the uncertainty in estimates of deforestation. A best estimate value is about 7% of global emissions in 2004 (see Table 12.3). There are many country-specific studies of the potential to reduce deforestation (Chapter 9).
- Electricity: Adoption of cost-effective energy efficiency technologies in electricity generation, transmission distribution, and end-use reduce costs and local pollution in addition to reduction of greenhouse gas emissions. Electricity deregulation or privatization can be practised in any country and can impact the global electricity-related emissions which amounted to about 20% of global emissions.
- Oil import security: Oil import security is important to ensure reliable supply of fuels and electricity. Diversification of oil imports, through increasing imported and domestic sources oil and other energy carriers is an approach adopted by countries concerned about energy security. The percentage of net oil imports serves as one indicator of a country’s energy security. The CO2 emissions associated with net oil imports amounted to about 20% of global emissions (see Table 12.3). Reducing oil imports as a strategy to improve energy security thus offers a significant global opportunity to reduce emissions. Minimizing the use of coal as a substitute, and increasing use of less-carbon-intensive energy sources and reducing energy intensity of the economy are options that could be pursued to achieve this goal (IEA, 2004b). However, heavy use of biomass as a fossil fuel substitute may compete with other societal goals such as food security, alleviation of hunger and conservation of biodiversity.
Table 12.3: Mainstreaming climate change into development choices - selected examples
| Selected sectors | Non-climate policy instruments and actions that are candidates for mainstreaming | Primary decision-makers and actors | Global greenhouse gas emissions by sector that could be addressed by non-climate policies (% of global GHG emissions)a,d | Comments |
|---|
| Macro-economy | Implement non-climate taxes/subsidies and/or other fiscal and regulatory policies that promote sustainable development | State (governments at all levels) | 100 | Total global GHG emissions | Combination of economic, regulatory, and infrastructure non-climate policies could be used to address total global emissions |
| Forestry | Adoption of forest conservation and sustainable management practices | State (governments at all levels) and civil society (NGOs) | 7 | GHG emissions from deforestation | Legislation/regulations to halt deforestation, improve forest management, and provide alternative livelihoods can reduce GHG emissions and provide other environmental benefits |
| Electricity | Adoption of cost-effective renewables, demand-side management programmes, and transmission and distribution loss reduction | State (regulatory commissions), market (utility companies) and, civil society (NGOs, consumer groups) | 20b | Electricity sector CO2 emissions (excluding auto producers) | Rising share of GHG-intensive electricity generation is a global concern that can be addressed through non-climate policies |
| Petroleum imports | Diversifying imported and domestic fuel mix and reducing economy’s energy intensity to improve energy security | State and market (fossil fuel industry) | 20b | CO2 emissions associated with global crude oil and product imports | Diversification of energy sources to address oil security concerns could be achieved such that GHG emissions are not increased |
| Rural energy in developing countries | Policies to promote rural LPG, kerosene and electricity for cooking | State and market (utilities and petroleum companies), civil society (NGOs) | <2c | GHG emissions from biomass fuel use, not including aerosols | Biomass used for rural cooking causes health impacts due to indoor air pollution, and releases aerosols that add to global warming. Displacing all biomass used for rural cooking in developing countries with LPG would emit 0.70 GtCO2-eq., a relatively modest amount compared to 2004 total global GHG emissions |
| Insurance for building and transport sectors | Differentiated premiums, liability insurance exclusions, improved terms for green products | State and market (insurance companies) | 20 | Transport and building sector GHG emissions | Escalating damages due to climate change are a source of concern to insurance industry. Insurance industry could address these through the types of policies noted here |
| International finance | Country and sector strategies and project lending that reduces emissions | State (international Financial Institutions) and market (commercial banks) | 25b | CO2 emissions from developing countries (non-Annex 1) | IFIs can adopt practices so that loans for GHG-intensive projects in developing countries that lock-in future emissions are avoided |
Example of a sector where other benefits outweigh mainstreaming:
- Rural household energy use: Development of rural regions, better irrigation and water management, rural schools, better cook stoves in developing countries can promote sustainable development. The emissions associated with rural household activities, mostly derived from energy needed for cooking and some heating, are relatively small, however. These emissions are estimated to be between 10% and 15% of developing-country residential sector emissions or less than 0.5% of global emissions. Rural areas of developing countries rely primarily on traditional bioenergy and consume comparatively small amounts of fossil fuels. The use of improved cook stoves is one way to reduce biomass and fossil fuel use. The worldwide amount estimated by Smith (2002) for provision of LPG as fuel for roughly two billion households is about 2% of global GHG emissions. From a global perspective, Table 12.3 suggests that smaller sectors with significant other welfare benefits need not be burdened with having to reduce CO2 emissions since larger gains from sustainable development actions that address climate change mitigation are to be had elsewhere.
Emissions that key stakeholders can influence:
- International finance: While climate change mitigation is an important component of the multilateral bank (MDB) strategies, in practice climate change issues are not systematically incorporated into lending for all sectors. MDBs could explicitly integrate climate change considerations into their guidelines for country and sector strategies, and apply a greenhouse gas accounting framework in their operations (Sohn et al., 2005). MDBs can directly influence their own lending and indirectly influence the emissions of borrowing countries. The annual emissions from World Bank-funded energy activities alone, for instance, were estimated to range from 0.27 to 0.32 GtCO2 (World Bank, 1999). MDBs could directly influence more than the aforementioned amounts once emissions associated with all lending activities of all MDBs are counted. Indirectly, through policy dialogue and conditionality, MDBs could influence additional emissions from developing countries, which amounted to about 25% of global emissions in 2004 (Table 12.3).
- Insurance: Buildings and transport vehicles form the bulk of the insured activities. Emissions from these sectors and from all international marine vessels and aircraft are estimated to be about 20% of global emissions, giving insurers a significant potential role in controlling emissions. Some insurers are beginning to recognize climate-change risks to their business (Vellinga et al., 2001; Mills, 2005). Examples of actions may include premiums differentiated to reflect vehicle fuel economy (this is not unique to the buildings and/or transport sector or distance driven); liability insurance exclusions for large emitters; improved terms to recognize the lower risks associated with green buildings; or new insurance products to help manage technical, regulatory, and financial risks associated with emissions trading (Mills, 2003).