sectoral economic costs and benefits of ghg mitigation - IPCC

Terry Barker, Lenny Bernstein, Ken Gregory, Steve Lennon and Julio Torres Martinez
Additional Comments and Papers
After the meeting, Marc Darras submitted written comments on Bartsch's paper. These are
reproduced in Part II of this report. He addressed two topics: methane leakage and some of the
factors driving the selection of energy source.
On methane leakage, Darras made the following points:
• Much of the methane leakage and flaring attributed to the gas industry is actually a byproduct
of oil production and should be attributed to the oil industry. Currently leakage is
about 1.3% of production. Leakage could reach approximately 9% vs. coal or 5% vs. oil
before natural gas' CO 2 emission advantage was eliminated.
• The main sources of leakage are the production site and distribution in old town gas
networks. New natural gas distribution systems should have lower emission.
On the factors driving selection of energy source, Darras said that control of local and regional
air pollutants was currently the major driver for switching from coal to oil or natural gas in
developed countries, and from non-commercial biomass to fossil fuels in developing countries.
He also discussed the complexity of the process involved in deciding when and how commercial
development of new energy resources will take place. This complexity may be difficult to
incorporate into a global model, but it is a limitation of macro economic models.
At the meeting, Seth Dunn of the Worldwatch Institute distributed a paper titled: Climate Policy
and Job Impacts: Recent assessments and the case of coal. The paper cited several recent studies
in the U.S. and Europe that suggest that net employment increases can be achieved through fullcost
energy pricing, an accelerated uptake of energy-efficient and renewable technologies, and
the greater use of alternative transportation modes.
Even in the absence of climate policies, employment in fossil fuel energy industries is declining
and will continue to do so through consolidation and other cost-cutting practices. Coal miners,
for example, account for less than 0.33% of the global workforce. A major challenge facing
governments seeking to ease the transition from fossil fuels will be to facilitate the location of
"sunrise" industries - such as natural gas, wind turbines, and solar photovoltaics - in communities
affected by the decline of "sunset" industries like coal and oil. In addition, the use of energy
and/or carbon tax revenue to reduce payroll taxes and the targeted redirection of fossil fuel
subsidies towards job retraining programs and retirement packages could lessen the resistance of
workers in these industries to proactive climate policies.
Jonathan Pershing of the International Energy Agency (IEA) distributed a paper titled: Fossil
Fuel Implications of Climate Change Mitigation Responses. This paper is not an official IEA
publication, and represents the views of the author. However, it provides an excellent analysis of
the factors that may lessen the impacts of GHG mitigation policies on the fossil fuel industries.
The paper's Executive Summary is reproduced below.
Standard wisdom suggests that one of the consequences of efforts to mitigate climate change
will be a reduction in the demand for all forms of carbon-based fossil fuels. These include
natural gas, oil and coal. Inasmuch as the carbon emitted per unit of energy produced from
each fuel is different 1 , in the absence of new technological developments, we might expect to
see a sharper reduction in the use of coal than oil, and more reductions in oil than natural gas
- the use of which may even increase due to its lower carbon content.
1 According to the IPCC, the ratio of carbon per unit of energy produced is approximately 3:4:5 for gas:
oil: coal.
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