sectoral economic costs and benefits of ghg mitigation - IPCC

Fossil Fuels
of seeking to reduce emissions of greenhouse gases, are proposing to further increase such taxes.
However, and as indicated above, the high implied carbon price of refined petroleum products
(more than US$ 450/ton of CO 2 at the high end of current taxation levels) suggests that
consumers will not substantially change their behavior as a consequence of the addition of small
increments to this load. Thus, while the demand may decline somewhat from what might be
anticipated, the overall volume is likely to remain quite high.
4 Conclusions
It is clear from the foregoing discussion that a number of questions surround the issue of how to
evaluate the impact on fossil fuel exporting countries of actions to mitigate climate change.
Separating climate policy actions from normal market fluctuations, and assessing the relative
importance of supply and demand driven changes in “with” and “without” climate action
scenarios may be a difficult if not an impossible task.
Notwithstanding such challenges, it also seems clear that the near term impacts of climate change
mitigation policies are likely to be relatively limited for fossil fuel exporting countries based on
the net effect of model results combined with the various caveats discussed in this paper.
However, the longer term impacts (both from climate change mitigation policy and also from
longer term energy trends) might be more significant – suggesting that countries which rely
heavily on the export of fossil fuels to drive their economies may need to diversify.
Whether or not effects of climate mitigation policy can be quantified, a number of actions might
be taken to reduce their impacts, including:
• the widest possible application of the Kyoto Protocol’s market mechanisms (emissions
trading, joint implementation and CDM);
• the use of other elements of flexibility (such as sinks and non-CO 2 greenhouse gases);
• beginning with cost-effective policies such as subsidy removals; and
• promoting efforts to exchange information on ways to broaden commercial portfolios
and investment strategies.
It is in the long-term interest not only of fossil fuel exporters, but of importers and consumers as
well, that the transition from the current carbon dioxide and greenhouse gas intensive global
economy to a more sustainable, lower emission-intensity economy be as smooth as possible.
Appendix I
Texts of Relevant Articles from UNFCCC and Kyoto Protoco
Article 4.8 and 4.9 of the UN FCCC:
“4.8. In the implementation of the commitments in this Article, the Parties shall give full
consideration to what actions are necessary under the Convention, including actions related to
funding, insurance and the transfer of technology, to meet the specific needs and concerns of
developing country Parties arising from the adverse effects of climate change and/or the impact
of the implementation of response measures, especially on:
(a) Small island countries;
(b) Countries with low-lying coastal areas;
(c) Countries with arid and semi-arid areas, forested areas and areas liable to forest decay;
(d) Countries with areas prone to natural disasters;
(e) Countries with areas liable to drought and desertification;
(f) Countries with areas of high urban atmospheric pollution;
(g) Countries with areas with fragile ecosystems, including mountainous ecosystems;
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