sectoral economic costs and benefits of ghg mitigation - IPCC

Paul Cicio, Seth Dunn, Michael Grubb, José Moreira and Jonathan Pershing
Sectoral Impacts of Mitigation Measures - Key Issues and
Policy Implications 1
Paul Cicio, Seth Dunn, Michael Grubb, José Moreira and Jonathan Pershing
Given the variety and uncertainty of model results, how should policy makers interpret the wide
variances in energy market effects (in particular with respect to the effects on coal, oil,
and gas production, use, and export revenues)?
The panel agreed that markets forces were driving the changes in fossil fuel demand, and that in
the short term, these forces were likely to be larger than any climate change policy impacts.
Several panellists pointed out that we are currently on a business-as-usual course and likely to
remain on it through 2010.There was also agreement that models aggregate impacts beyond the
level that is of interest to policymakers. Exactly who were the winners and losers was critical and
these could be affected by policy choices.
How might the share of non-hydro renewables in electricity generation rise from 3% (at present)
to the 10 - 20% projected in model results by 2010 - 2020, and what are the implications
of this increase? Might other renewables end uses be affected differentially (i.e., will
there be differences between electricity generation, heating, transport, etc.)?
The panel agreed answer to the question of rate of growth in renewables clearly depended on
which timeframe and increase were considered: 10% in 2020 was more credible than 20% in
2010. Several panellists stated that capital stock turnover rates had to be considered. Policies and
measures were important in moving the market, the market would not move to renewables on its
own. Net metering, where small generators can sell power into the grid at the same price as they
buy it, was an example of a policy that could help move the market. The panel also agreed that
care had to be taken in evaluating the growth of renewables during the 1990s. That growth was in
substitution, where rates can be very high -- cars grew at 25%/year when they were replacing
horses, then slowed down. Also, much of the growth has been subsidised by governments.
Finally, the panel agreed that most of the effort in renewables had been in electricity generation,
and that applying renewables to other sectors of the economy, particularly transport, would be
more difficult.
Most models project significant OPEC revenue losses relative to projected income -- yet sectoral
analyses suggest very high near term costs from any mitigation actions in the transport
sector. How should analysts/policymakers resolve such conflicts?
The panel saw this issue as one of timing. In the short term there was a conflict, but in the longer
term, with the development of technology, that conflict was likely to disappear. There were also
numerous comments about models being assumption-driven, and policymakers choosing only
those results that they liked.
1
See Sessions Proceedings for more details of the panel disussion.
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