EXECUTIVE SUMMARY
This chapter frames climate change mitigation policies in the context of general development issues and recognizes that there is a two-way relationship between climate change and sustainable development. These relationships create a wide potential for linking climate change and sustainable development policies, and an emerging literature has identified methodological approaches and specific policies that can be used to explore synergies and tradeoffs between climate change and economic, social, and environmental sustainability dimensions.
Decision-making about climate change policies is a very complex and demanding task since there is no single decision-maker and different stakeholders assign different values to climate change impacts and to the costs and benefits of policy actions. However, many new initiatives emerge from governmental cooperation efforts, the business sector and NGOs (non-governmental organizations), so various coalitions presently play an increasing role. A large number of analytical approaches can be used to support decision-making, and progress has been made both in integrated assessment models, policy dialogues and other decision support tools.
Like most policy-making, climate policy involves trading off risks and uncertainties. Risks and uncertainties have not only natural but also human and social dimensions. They arise from missing, incomplete and imperfect evidence, from voluntary or involuntary limits to information management, from difficulties in incorporating some variables into formal analysis, as well as from the inherently unpredictable elements of complex systems. An increasing international literature considers how the limits of the evidence basis and other sources of uncertainties can be estimated.
Costs and benefits of climate change mitigation policies can be assessed (subject to the uncertainties noted above) at project, firm, technology, sectoral, community, regional, national or multinational levels. Inputs can include financial, economic, ecological and social factors. In formal cost-benefit analyses, the discount rate is one major determinant of the present value of costs and benefits, since climate change, and mitigation/adaptation measures all involve impacts spread over very long time periods. Much of the literature uses constant discount rates at a level estimated to reflect time preference rates as used when assessing typical large investments. Some recent literature also includes recommendations about using time-decreasing discount rates, which reflect uncertainty about future economic growth, fairness and intra-generational distribution, and observed individual choices. Based on this, some countries officially recommend using time-decreasing discount rates for long time horizons.
The potential linkages between climate change mitigation and adaptation policies have been explored in an emerging literature. It is concluded that there is a number of factors that condition societies’ or individual stakeholders’ capacity to implement climate change mitigation and adaptation policies including social, economic, and environmental costs, access to resources, credit, and the decision-making capacity in itself.
Climate change has considerable implications for intra-generational and inter-generational equity, and the application of different equity approaches has major implications for policy recommendations, as well as for the implied distribution of costs and benefits of climate policies. Different approaches to social justice can be applied when evaluating equity consequences of climate change policies. They span traditional economic approaches where equity appears in terms of the aggregated welfare consequences of adaptation and mitigation policies, and rights-based approaches that argue that social actions are to be judged in relation to the defined rights of individuals.
The cost and pace of any response to climate change concerns will critically depend on the social context, as well as the cost, performance, and availability of technologies. Technological change is particularly important over the long-term time scales that are characteristic of climate change. Decade (or longer) time scales are typical for the gaps involved between technological innovation and widespread diffusion, and of the capital turnover rates characteristic for long-term energy capital stock and infrastructures. The development and deployment of technology is a dynamic process that arises through the actions of human beings, and different social and economic systems have different proclivities to induce technological change, involving a different set of actors and institutions in each step. The state of technology and technology change, as well as human capital and other resources, can differ significantly from country to country and sector to sector, depending on the starting point of infrastructure, technical capacity, the readiness of markets to provide commercial opportunities and policy frameworks.
The climate change mitigation framing issues in general are characterized by high agreement/much evidence relating to the range of theoretical and methodological issues that are relevant in assessing mitigation options. Sustainable development and climate change, mitigation and adaptation relationships, and equity consequences of mitigation policies are areas where there is conceptual agreement on the range of possible approaches, but relatively few lessons can be learned from studies, since these are still limited (high agreement, limited evidence). Other issues, such as mitigation cost concepts and technological change are very mature in the mitigation policy literature, and there is high agreement/much evidence relating to theory, modelling, and other applications. In the same way, decision-making approaches and various tools and approaches are characterized by high agreement on the range of conceptual issues (high agreement, much evidence), but there is significant divergence in the applications, primarily since some approaches have been applied widely and others have only been applied to a more limited extent (high agreement, limited evidence). There is some debate about which of these framing methodologies and issues relating to mitigation options are most important, reflecting (amongst other things) different ethical choices – to this extent at least there is an irreducible level of uncertainty (high agreement, limited evidence).