Appendix E



GLOSSARY OF TERMS



Annex I Countries
Annex I of the FCCC lists the countries who were members of the OECD in 1992, 11 countries undergoing the process of transition to a market economy, and the European Economic Community. Annex I parties are committed to adopt national policies and take measures to mitigate climate change.

Capital Costs
Costs associated with the capital or investment expenditures on land, plant, equipment, and inventories. Unlike labor and operating costs, capital costs are independent of the level of output.

Commercialization
Sequence of actions necessary to achieve market entry and general market competitiveness of new innovative technologies, processes, and products.

Cost-Effective
A criterion that specifies that a technology or measure deliver a good or service at equal or lower cost than current practice. In this paper, environmental externalities are not internalized; payback periods vary, depending on the particular sector and market.

Economic Potential
The portion of the technical potential for GHG emissions reductions or energy- efficiency improvements that could be achieved cost-effectively in the absence of market barriers. The achievement of the economic potential requires additional policies and measures to break down market barriers.

Emission Permit
A non-transferable or tradable allocation of entitlements by a government to an individual firm to emit a specified amount of a substance.

Emission Quota
The portion or share of total allowable emissions assigned to a country or group of countries within a framework of maximum total emissions and mandatory allocations of resources or assessments.

Emission Standard
A level of emission that under law may not be exceeded.

Energy Intensity
Ratio of energy consumption and economic or physical output. At the national level, energy intensity is the ratio of total domestic primary energy consumption or final energy consumption to gross domestic product or physical output.

Externalities
By-products of activities that affect the well-being of people or damage the environment, where those impacts are not reflected in market prices. The costs (or benefits) associated with externalities do not enter standard cost accounting schemes.

Final Energy
Energy supplied that is available to the consumer to be converted into useful energy (e.g., electricity at the wall outlet).

Full-Cost Pricing
The pricing of commercial goods—such as electric power—that would include in the final prices faced by the end user not only the private costs of inputs, but also the costs of the externalities created by their production and use.

GHG Reduction Potential
Possible reductions in emissions of greenhouse gases (quantified in terms of absolute reductions or in percentages of baseline emissions) that can be achieved through the use of technologies and measures.

Information and Education Measures
Actions that provide information, training, or encouragement, or help to develop understanding. Such measures may provide information about the availability, performance, and other characteristics of technologies, practices, and measures.

Marginal Cost Pricing
The pricing of commercial goods and services such that the price equals the additional cost that arises from the expansion of production by one additional unit.

Market Barriers
Conditions that prevent or impede the diffusion of cost-effective technologies or practices that could mitigate GHG emissions.

Market-Based Incentives
Measures intended to directly change relative prices of energy services and overcome market barriers.

Market Penetration
The share of a given market that is provided by a particular good or service at a given time.

Market Potential (or Currently Realizable Potential)
The portion of the economic potential for GHG emissions reductions or energy- efficiency improvements that could be achieved under existing market conditions, assuming no new policies and measures.

Measures
Actions that can be taken by a government or a group of governments, often in conjunction with the private sector, to accelerate the use of technologies or other practices that reduce GHG emissions.

No Regrets
Measures whose benefits—such as improved performance or reduced emissions of local/regional pollutants, but excluding the benefits of climate change mitigation—equal or exceed their costs. They are sometimes known as “measures worth doing anyway.”

Opportunity Cost
The cost of an economic activity foregone by the choice of another activity.

Policies
Procedures developed and implemented by government(s) regarding the goal of mitigating climate change through the use of technologies and measures.

Primary Energy
Energy embodied in natural resources (e.g., coal, crude oil, sunlight, uranium) that has not undergone any anthropogenic conversion or transformation.

Project Costs
All financial costs of a project such as capital, labor, and operating costs.

Regulatory Measures
Rules or codes enacted by governments that mandate product specifications or process performance characteristics.

Research, Development, and Demonstration
Scientific/technical research and development of new production processes or products, coupled with analysis and measures that provide information to potential users regarding the application of the new product or process; demonstration tests the feasibility of applying these products or processes via pilot plants and other pre-commercial applications.

Scenario
A plausible description of how the future may develop, based on a coherent and internally consistent set of assumptions about key relationships and driving forces (e.g., rate of technology changes, prices). Note that scenarios are neither predictions nor forecasts.

Standards/Performance Criteria
Set of rules or codes mandating or defining product performance (e.g., grades, dimensions, characteristics, test methods, rules for use).

Structural Changes
Changes, for example, in the relative share of GDP produced by the industrial, agricultural, or services sectors of an economy; or, more generally, systems transformations whereby some components are either replaced or partially substituted by other ones.

Technical Potential
The amount by which it is possible to reduce GHG emissions or improve energy efficiency by using a technology or practice in all applications in which it could technically be adopted, without consideration of its costs or practical feasibility.

Technology
A piece of equipment or a technique for performing a particular activity.

Voluntary Measures
Measures to reduce GHG emissions that are adopted by firms or other actors in the absence of government mandates. Voluntary measures help make climate-friendly products or processes more readily available or encourage consumers to incorporate environmental values in their market choices.


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