sectoral economic costs and benefits of ghg mitigation - IPCC

Fossil Fuels
A second issue that must also be considered in this discussion is whether, even absent climate
mitigation policies, current energy and energy related activities would be unchanged. This is a
question that is seldom raised in the context of examining impacts on fossil fuel exporters –
although, in theory, the “business-as-usual” case defines the trend that analysts think may obtain
without climate policies. Here too, some assessment of possible energy trends suggests that
rethinking may be required to accurately assess the “reference” case against which any impacts
might need to be measured. For example, in coal-based power generation, efforts to reduce
emissions of sulfur, particulates and oxides of nitrogen are already having a significant effect on
coal use and operating costs; will future power be produced without coal, or will technology
evolve to eliminate emissions of these criteria pollutants?
In both the discussion of policy choices and the “no-climate-policy” case, there will clearly be
different implications for each of the fossil fuels. For example, coal use in the future can be
expected to follow a different path than oil or gas whether climate mitigation measures are taken
or not. To help draw out these fuel-specific issues, the discussion of these questions in Section 2
below has thus been divided, and looks separately at coal, and at oil & gas.
Finally, a number of countries have already begun to face the prospects of reduced revenues from
export of fossil fuels – and have begun to take actions to offset some of the possible impacts of
these declining revenues. Considering their situations may provide a useful model that could
apply more broadly should global climate mitigation efforts indeed prove detrimental to fossil
fuel exporting countries. In addition, some of the mitigation policies that countries might adopt
could be less “damaging” than others. These issues are broadly addressed in Part 3 of this paper.
2 Fossil Fuels: Supply, Demand and Emission Mitigation Options
Approximately 85% of the world’s emissions of greenhouse gases come from the energy sector,
and within this sector, almost all the emissions are from the combustion of fossil fuels. The 3,387
million metric tons of crude oil, 2,296,152 million cubic meters of gas, and 3,796 million tons of
coal burned in 1997 accounted for 43%, 19% and 38% percent respectively, of the contribution
to global carbon dioxide emissions.
Table 1 Regional Distribution of Fossil Fuel Reserves and Exports (at end 1998)
Region
Gas
(billion cubic meters)
Oil
(million barrels)
Reserves Exports LNG Reserves
Exports
Crude
Product
Coal
(million tons)
Reserves
Exports
N. America 8400 90.5 1.8 85100 156.8 59.1 256500 104.7
S. America 6200 3.6 89500 115.1 44.4 21600 36.0
Europe 5200 87.4 20700 39.9 40.2 122000 45.8
Middle East 49500 0.5 20 673700 817 109.8 200
FSU 56700 122 65400 123 52.3 230000 18.7
Africa 10200 27.5 25.8 75400 253 34.4 61400 67.1
Asia- Pacific 10200 1.5 65.4 43100 70.4 56.3 292000 246.9
Unidentified 9 13
World 146400 333.1 113 1052900 1584.9 409.5 984000 519.2
Source: BP–Amoco database and IEA databases for Coal exports.
To understand the changes in national welfare as a consequence of changes in fuel sourcing, we
first need to know the distribution of these fuels. Table 1 indicates the location of fossil fuel
reserves by region. It is clear from the table that the distributions of each fuel are extremely
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