4.5.3 Co-benefits of mitigation policies

Mitigation policies relating to energy efficiency of plants, fuel switching, renewable energy uptake and nuclear power, may have several objectives that imply a diverse range of co-benefits. These include the mitigation of air-pollution impacts, energy-supply security (by increased energy diversity), technological innovation, reduced fuel cost, employment and reducing urban migration. Reducing GHG emissions in the energy sector yields a global impact, but the co-benefits are typically experienced on a local or regional level. The variety of co-benefits stemming from GHG mitigation policies and the utilization of new energy technologies can be an integral part of economic policies that strive to facilitate sustainable development. These include improved health, employment and industrial development, and are explored in Chapter 11. This section therefore only covers aspects specifically related to energy supply. Quantitative information remains primarily limited to health effects with many co-effects not quantified due to a lack of information.

Fuel switching and the growth of energy-efficiency programmes (Swart et al., 2003) can lead to air-quality improvements and economic benefits as well as reduced GHG emissions (Beg, 2002). The relatively high capital costs for many renewable energy technologies are offset by the fuel input having minimal or zero cost and not prone to price fluctuations, as is the case with fossil fuels (Janssen, 2002). Nuclear energy shares many of the same market co-benefits as renewables (Hagen et al., 2005). Benefits of GHG mitigation may only be expected by future generations, but co-benefits are often detectable to the current generation.

Co-benefits of mitigation can be important decision criteria in analyses by policymakers, but often neglected (Jochem and Madlener, 2002). There are many cases where the net co-benefits are not monetised, quantified or even identified by decision-makers and businesses. Due consideration of co-benefits can significantly influence policy decisions concerning the level and timing of GHG mitigation action. There may be significant economic advantages to the national stimulation of technical innovation and possible spillover effects, with developing countries benefiting from innovation stimulated by GHG mitigation in industrialized countries. Most aspects of co-benefits have short-term effects, but they support long-term mitigation policies by creating a central link to sustainable development objectives (Kessels and Bakker, 2005). To date, most analyses have calculated GHG mitigation costs by dividing the incremental costs of ‘mitigation technologies’ by the amount of GHG avoided. This implicitly attributes all the costs to GHG-emission reduction and the co-benefits are seen as ancillary. Ideally, one would attribute the incremental costs to the various co-benefits by attempting to weight them. This could lead to significantly lower costs of GHG reductions since the other co-benefits would carry a share of the costs together with a change in the cost ranking of mitigation options (Schlamadinger et al. 2006).

The reduced costs of new technologies due to experience, and the incentives for further improvement due to competition, can be co-benefits of climate-change policies (Jochem and Madlener, 2002). New energy technologies are typically more expensive during their market-introduction phase but substantial learning experience can usually be achieved to reduce costs and enhance skill levels (Barreto, 2001; Herzog et al., 2001; IEA, 2000; McDonald and Schrattenholzer, 2001; NCOE, 2004). Increased net employment and trade of technologies and services are useful co-benefits given high unemployment in many countries. Employment is created at different levels, from research and manufacturing to distribution, installation and maintenance. Renewable-energy technologies are more labour-intensive than conventional technologies for the same energy output (Kamman et al., 2004). For example, solar PV generates 5.65 person-years of employment per 1 million US$ investment (over ten years) and the wind-energy industry 5.7 person-years. In contrast, every million dollars invested in the coal industry generates only 3.96 person-years of employment over the same time period (Singh and Fehrs, 2001). In South Africa, the development of renewable energy technologies could lead to the creation of over 36,000 direct jobs by 2020 (Austin et al., 2003) while more than 900,000 new jobs could be created across Europe by 2020 as a result of the increased use of renewable energy (EUFORES, 2004).