sectoral economic costs and benefits of ghg mitigation - IPCC

Fossil Fuels
Table 2
Emission Abatement Studies
Changes in CO 2 Emissions and Gas Demand from Reference Case in Alternative
Change in
CO2
Emissions
Change in
Natural Gas
Demand
Ratio of Changes
in Gas Demand
to those of CO 2
Emissions Year Region
(%) (%)
DRI (1992) -11.7 -7.2 0.62 2005 EC
Hoeller et al (1991) -49.2 -27.4 0.56 2000 World
Bossier and De Rous (1992) -8.2 3.0 -0.37 1999 Belgium
Proost and Van Regemorter (1992) -28.0 15.3 -0.55 2005 Belgium
Burniaux et al (1991) -53.6 0.0 0.0 2020 World
Barker (1995) -12.8 -6.2 0.48 2005 UK
IEA (1993) -8.8 23.0 -2.61 2010 OECD
Ghanem et al (1999) -9.0 -8.2 0.91 2010 World
Baron (1996) (1) -8.5 (2) -4.0 0.47 2000 USA
Birkelund et al (1994) -10.7 -8.0 0.75 2010 EU
Bernow et al (1997) -17.8 -5.4 0.30 2015 Minnesota
Gregory et al (1992) -8.4 -5.2 0.62 2005 UK
WEC (1993) Case C -24.3 -16.5 0.68 2020 World
Kratena and Schleicher (1998) -29.0 -36.4 1.26 2005 Austria
Mitsubishi Research Institute (1998) -11.3 (3) 9.2 -0.81 2010 OECD
Fujime (1998) -16.3 (3) -6.2 0.38 2010 Japan
Bernstein, Montgomery, Rutherford (1999) -30.0 -25.0 0.83 2010 USA
Bernstein, Montgomery, Rutherford (1999) -24.0 -49.0 2.04 2010 Japan
Bernstein, Montgomery, Rutherford (1999) -18.0 -38.0 2.11 2010 EU
Bernstein, Montgomery, Rutherford (1999) -25.0 -41.0 1.64 2010 Other OECD
Bacchilega et al (1999) -2.3 -1.2 0.52 2010 Italy
(1) Citing a study by the US Congressional Budget Office (CBO).
(2) Estimated.
(3) Change in fossil fuel demand.
Median ratio (column 3): 0.56
Reviewing the published studies as shown in Table 2, the percentage fall in CO 2 emissions and in
gas demand, we note that median impact estimate suggests that gas demand, compared to
reference case, will fall by about half of that in carbon emissions. Therefore gas demand may,
indeed, be lower as a result of the Kyoto policies compared to what they would have been. Given
that many oil exporting countries are also gas exporters, such countries could arguably suffer a
double loss in export revenue. It is important, therefore, to include falling gas revenues in the
total impact assessment.
Impact Minimisation
Finally, the last part of the paper examines how these impacts could be minimised. Needless to
say that OECD energy taxation, especially in EU countries, on oil products is very high and has a
strong emphasis upon oil. For example, average tax on the composite barrel in the EU was $65/b
in 1998, or 68% of retail price, while taxes on coal and natural gas are either nil or negligible.
Calls for "greening" of taxes have been heard even among OECD policy-makers (e.g. Norwegian
Energy Minister). Research has also indicated energy efficiency gains for the economy as a result
of restructuring energy taxes according to their carbon content. Therefore, it is better to examine
a scenario based on restructuring energy taxes according to their carbon content. This is one of
the most effective ways to minimise the negative impacts on the economy of developing
countries and, at the same time, an effective way to reduce CO 2 emissions by a significant
degree. It is interesting to note that OECD CO 2 emissions will be reduced by at least 10% by
2010, once the energy taxes are restructured according to their carbon content. This is significant
CO 2 emissions reduction which fulfils almost half of the Kyoto target.
66