1  The scope of this paper was guided by several UNFCCC documents prepared for the Ad Hoc Group on the Berlin Mandate (AGBM), including FCCC/AGBM/1995/4 and FCCC/AGBM/1996/2.
2  Primary energy is the chemical energy embodied in fossil fuels (coal, oil, and natural gas) or biomass, the potential energy of a water reservoir, the electromagnetic energy of solar radiation, and the energy released in nuclear reactors. For the most part, primary energy is transformed into electricity or fuels such as gasoline, jet fuel, heating oil, or charcoal--called secondary energy. The end-use sectors of the energy system provide energy services such as cooking, illumination, comfortable indoor climate, refrigerated storage, transportation, and consumer goods using primary and secondary energy forms, as appropriate.
3  Because of its potential effects on market creation, government procurement is counted as a market-based program in some sections of this paper.
4  Carbon equivalents of non-CO2 GHGs are calculated from the CO2-equivalents, using the 100-year global warming potentials (GWPs): CH4 = 21, N2O = 310 (SAR I, 2.5, Table 2.9).
2. Residential, Commercial and Institutional Buildings Sector
5  This section is based on SAR II, Chapter 22, Mitigation Options for Human Settlements  (Lead Authors: M. Levine, H. Akbari, J. Busch, G. Dutt, K. Hogan, P. Komor, S. Meyers, H. Tsuchiya, G. Henderson, L. Price, K. Smith, and Lang Siwei).
6  Global energy use and emissions values are based on IS92 scenarios.
7  Tables 2 and 3 include only carbon emissions resulting from the use of fuels sold commercially. They do not include the large quantities of biomass fuels used in developing countries for cooking. Fuel switching from biomass fuels for cooking to sustainable, renewable fuels such as biogas or alcohol in developing countries can reduce these emissions (SAR II, 188.8.131.52).
8  Also see Section 9, Economic Instruments.
3. Transport Sector
9  This section is based on SAR II, Chapter 21, Mitigation Options in the Transportation Sector  (Lead Authors: L. Michaelis, D. Bleviss, J.-P. Orfeuil, R. Pischinger, J. Crayston, O. Davidson, T. Kram, N. Nakicenovic, and L. Schipper).
10  In cooperation with ICAO and the international ozone assessment process under the Montreal Protocol, the IPCC has agreed to conduct an assessment of the global atmospheric effects of aircraft emissions, including evaluation of technologies and measures for reducing emissions. This assessment will be available in 1998.
4. Industrial Sector
11  This section is based on SAR II, Chapter 20, Industry  (Lead Authors: T. Kashiwagi, J. Bruggink, P.-N. Giraud, P. Khanna, and W. Moomaw).
12  In the IS92 scenarios, hence in this paper, the global industrial sector includes industrial activities related to manufacturing, agriculture, mining, and forestry.
13  ISO 14000 is an independently certifiable environmental management system established by the non-governmental International Standards Organization.
14  Chapter 11 of SAR III uses the term "joint implementation" to include "activities implemented jointly" and that usage is continued here.
5. Energy Supply Sector
15  This section is based primarily on SAR II, Chapter 19, Energy Supply Mitigation Options  (Lead Authors: H. Ishitani, T. Johansson, S. Al-Khouli, H. Audus, E. Bertel, E. Bravo, J. Edmonds, S. Frandsen, D. Hall, K. Heinloth, M. Jefferson, P. de Laquil III, J.R. Moreira, N. Nakicenovic, Y. Ogawa, R. Pachauri, A. Riedacker, H.-H. Rogner, K. Saviharju, B. Sorensen, G. Stevens, W.C. Turkenburg, R.H.Williams, and F. Zhou); SAR II, Chapter B, Energy Primer  (Lead Authors: N. Nakicenovic, A. Grubler, H. Ishitani, T. Johansson, G. Marland, J.R. Moreira, and H-H. Rogner); and SAR III, Chapter 11, An Economic Assessment of Policy Instruments for Combatting Climate Change. It also draws to a lesser extent on the SAR II and III SPMs.
16  Chapter 11 of SAR III uses the term "joint implementation" to include "activities implemented jointly" and that usage is continued here.
6. Agriculture Sector
17  This section is based on SAR II, Chapter 23, Agricultural Options for Mitigation of Greenhouse Gas Emissions   (Lead Authors: V. Cole, C. Cerri, K. Minami, A. Mosier, N. Rosenberg, D. Sauerbeck, J. Dumanski, J. Duxbury, J. Freney, R. Gupta, O. Heinemeyer, T. Kolchugina, J. Lee, K. Paustian, D. Powlson, N. Sampson, H. Tiessen, M. van Noordwijk, and Q. Zhao).
18  Annex I countries' share of emission reductions is based on production data in the Food and Agriculture Organization (FAO) 1994 Production Yearbook, Vol. 48, FAO Statistics Series. Rome, Italy.
7. Forest Sector
19  This section is based on SAR II, Chapter 24, Management of Forests for Mitigation of Greenhouse Gas Emissions  (Lead Authors: S. Brown, J. Sathaye, M. Cannell, and P. Kauppi).
20  Mitigation technologies, policies, and measures to reduce GHG emissions from grasslands, deserts, and tundra are still in their infancy, and mitigation options in these sectors have yet to be evaluated in depth; hence, these are not addressed in this report.
8. Solid Waste and Wastewater Disposal Sector
21  This section is based on SAR II, Chapter 22, Mitigation Options for Human Settlements  (Lead Authors: M. Levine, H. Akbari, J. Busch, G. Dutt, K. Hogan, P. Komor, S. Meyers, H. Tsuchiya, G. Henderson, L. Price, K. Smith, and Lang Siwei) and Chapter 23, Agricultural Options for Mitigation of Greenhouse Gas Emissions (Lead Authors: V. Cole, C. Cerri, K. Minami, A. Mosier, N. Rosenberg, D. Sauerbeck, J. Dumanski, J. Duxbury, J. Freney, R. Gupta, O. Heinemeyer, T. Kolchugina, J. Lee, K. Paustian, D. Powlson, N. Sampson, H. Tiessen, M. van Noordwijk, and Q. Zhao).
22  Chapter 11 of SAR III uses the term "joint implementation" to include "activities implemented jointly" and that usage is continued here.
9. Economic Instruments Sector
23  This section is based on SAR III, Chapter 11, An Economic Assessment of Policy Instruments for Combatting Climate Change  (Lead Authors: B.S. Fisher, S. Barrett, P. Bohm, M. Kuroda, J.K.E. Mubazi, A. Shah, and R.N. Stavins).
24  The term "tradable quota" is used to describe internationally traded emission allowances, while "tradable permit" refers to domestic trading schemes. Chapter 11 of SAR III uses the term "joint implementation" to include "activities implemented jointly" and that usage is continued here.
25  Technology transfer is not included since it is the subject of a Special Report.
26  In most economic systems, a tax will be shifted, at least in part, to customers or to suppliers of capital, labor, and other inputs in unpredictable ways.
27  Strictly speaking, the term "emission charge" or "fee" would be more appropriate, because this is a payment for a right to emit; however, the term "emission tax" is adopted because it is so widely used.
28  Conceptually, a permit could be defined either as a right to release repeated emissions (e.g., 1 t C/yr for the indefinite future) or a one-time right to emit a given quantity (e.g., 1 t/C).
29  As in the case of a carbon tax, it is impractical to include mobile and other small sources in a trading system based on actual emissions. This trading system (or tax) based on the carbon content of fossil fuels automatically incorporates these emissions.
30  All GHG emissions (adjusted for their heat- trapping potentials and atmospheric lifetimes) should be taxed (and carbon sequestration subsidized) at the same rate in all countries. As discussed earlier, it may not be practical to design a tax (rebate) that covers all of the sources (sinks).
31  Defining quotas as the right to emit a given quantity once reduces the risk of a present government selling future emission rights that might not be honored by future governments. This also reduces the possibility of large countries gaining power to distort the quota market.
32  If only a limited set of countries is involved, carbon leakage must be taken into account in both the tax and tradable quota cases.
33  World Trade Organization rules allow for border tax adjustments where the taxed or controlled inputs are physically incorporated in the final product. However, it is not clear if this rule applies to GHG emissions associated with the manufacture of a good, or whether it would be feasible in practice to implement such a system of border tax adjustments.
34  An exception, of course, is when a source has
received enough permits gratis  to cover its emissions. Even
Even in this case, however, it will be subjected to an implicit marginal cost
of emissions, since reducing emissions would allow it to sell more permits.
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