sectoral economic costs and benefits of ghg mitigation - IPCC

Terry Barker, Lenny Bernstein, Ken Gregory, Steve Lennon and Julio Torres Martinez
• Jonathan Stern said that these comments are economically correct, but do not deal with the
political reality in China, Russia and Ukraine. Not only is there a great deal of hot air, but
energy efficiency has the potential to create more.
• José Moreira questioned whether we are overestimating the impact of GHG mitigation; 1 -
2% of GDP is not that much.
On Bhattacharjee's Paper, the comments from the floor included the following:
• Steve Lennon agreed with the paper's conclusion that there was significant potential to
improve energy efficiency in developing nations, and pointed out that the Kyoto Protocol's
Clean Development Mechanism should help in implementing these improvements. He added
that plants moved from developed to developing countries, i.e., "leakage", would have
improved energy efficiency and would improve development, equity and sustainability in the
recipient countries.
• Henry Jacoby pointed out that the operation of plants in developing countries will not reflect
the carbon cost in developed nations, nor would the goods produced in those plants. Other
participants agreed with Jacoby.
Additional Papers
Five papers were distributed at the meeting covering the impacts of climate change mitigation
policies on energy-intensive industries.
Four of these papers, covering the USA cement, chemical, forest products and steel industries,
were distributed by Paul Cicio. Each of the papers provided background on the industry, its
energy-efficiency efforts to date, and the projected impacts of climate change mitigation policies.
Key points in these papers were:
Chemicals Industry
• In 1998, the U.S. chemical industry had shipments of $392 billion, nearly 2% of US GDP,
and exports of $68 billion, nearly 10% of USA exports. It invested $28.4 billion, adding to an
existing capital stock of $214 billion. It provided over 1 million high paying jobs at an
average wage of $17.42 per hour.
• The chemical industry is highly energy intensive, consuming 6.2 quads of energy in 1998,
nearly one quarter of U.S. industrial energy use and 6.8% of total U.S. energy consumption.
However, significant gains have been made in energy efficiency: energy consumed per unit
output has dropped 35% since 1970, and carbon emissions per unit output have dropped 43%
since 1974.
• A study by Charles River Associates found that compliance with the Kyoto Protocol would
result in a carbon price of $274 per ton. Without international emissions trading or a
feedstock exemption, total output of the U.S. chemical industry would fall by $43 billion
(1993$) or 12.4% of projected output in 2010. A feedstock exemption would reduce output
losses to 8.4%. Sector-specific caps without domestic trading could drive carbon prices even
higher, to as much as $750 per ton.
Cement Industry
• The U.S. is the world's third largest producer of cement, producing 80 million tonnes, or
5.4% of the world's total. It is a regional business with 60% of product being shipped to 150
miles or less. Energy, 74% of which comes from coal, accounts for about 35% of cement
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