12.2.4.5 Some general insights on the opportunities to change development pathways at the sectoral level

Although the examples discussed above are very diverse, some general patterns emerge. First, in any given country, sectors where effective production is far below the maximum feasible production with the same amount of inputs – sectors that are far away from their production frontier – have opportunities to adopt ‘win-win-win’ policies. Such policies free up resources and bolster growth, meet other sustainable development goals, and also, incidentally, reduce GHG emissions relative to baseline. Among the examples discussed above, the removal of energy subsidies in economies in transition, or the mitigation of urban pollution in highly polluted cities in the developing world pertain to the ‘win-win-win’ category. Of course, these policies may have winners and losers, but compensation mechanisms can be designed to make no-one worse off in the process.

Conversely, sectors where production is close to the optimal given available inputs – sectors that are closer to the production frontier – also have opportunities to reduce emissions by meeting other sustainable development goals. However, the closer to the production frontier, the more trade-offs are likely to appear. For example, as discussed above, diversifying energy supply sources in a country where the energy system is already cost-efficient might be desirable for energy security reasons and/or for local or global environmental reasons. But it might come at a cost to the country if, for example, diversification involves more expensive technologies or more risky investments (Dorian et al., 2006).

Third, in many of the examples reviewed above, what matters is not only that a ‘good’ choice is made at a certain time, but also that the initial policy has persisted for a long period – sometimes several decades – to truly have effects. The comparison between the development of European and USA cities since the end of World War II is a case in point. The reason is that some of the key dynamics for GHG emissions, such as technological development or land-use patterns, present a lot of inertia, and thus need sustained effort to be re-oriented. This raises deep institutional questions about the possibility of governments to make credible long-term commitments, particularly in democratic societies where policy-makers are in place only for short spans of time (Stiglitz, 1998).

A fourth element that stems from some of the examples outlined above is that often not one policy decision but an array of decisions are necessary to influence emissions. This is especially true when considering large-scale and complex dynamics such as the structure of cities or the dynamics of land-use. This raises, in turn, important issues of coordination between policies in several sectors, and at various scales.

Fifth, as already emphasized in Section 12.2.3, institutions are significant in determining how a given policy or a given set of policies ultimately impact on GHG emissions (World Bank, 2003). For example, the differentiated reactions of Japan, Italy, Germany and France to the first oil shock can be traced to differences in institutions, relative power of different influence groups, and political cultures (Hourcade and Kostopoulou, 1994).