4.1.1 Summary of Third Assessment Report (TAR)

Energy-supply and end-use-efficiency technology options (Table 3.36, TAR) showed special promise for reducing CO₂ emissions from the industrial and energy sectors. Opportunities included more efficient electrical power generation from fossil fuels, greater use of renewable technologies and nuclear power, utilization of transport biofuels, biological carbon sequestration and CCS. It was estimated that potential reductions of 350–700 MtC/yr (1.28–2.57 GtCO₂-eq/yr) were possible in the energy supply and conversion sector by 2020 for <100 US$/C (27.3 US$/tCO₂) (Table 3.37, TAR) divided equally between developed and developing countries. Improved end-use efficiency held greater potential for reductions.

There are still obstacles to implementing the low-carbon technologies and measures identified in the TAR. These include a lack of human and institutional capacity; regulatory impediments and imperfect capital markets that discourage investment, including for decentralized systems; uncertain rates of return on investment; high trade tariffs on emission-lowering technologies; lack of market information, and intellectual property rights issues. Adoption of renewable energy is constrained by high investment costs, lack of capital, government support for fossil fuels and lack of government support mechanisms.

The problem of ‘lock-in’ by existing technologies and the economic, political, regulatory, and social systems that support them were seen as major barriers to the introduction of low-emission technologies in all types of economies. This has not changed. Several technological innovations such as ground-source heat pumps, solar photovoltaic (PV) roofing, and offshore wind turbines have been recently introduced into the market as a result of multiple drivers including economic profit or productivity gains, non-energy-related benefits, tax incentives, environmental benefits, performance efficiency and other regulations. Lower GHG emissions were not always a major driver in their adoption. Policy changes in development assistance (Renewables, 2004) and direct foreign investment provide opportunities to introduce low-emission technologies to developing countries more rapidly.