The Technical Paper includes discussions of technologies and measures that can be adopted in three energy end-use sectors (commercial/residential/institutional buildings, transportation, and industry), as well as in the energy supply sector and the agriculture, forestry, and waste management sectors. Broader measures affecting national economies are discussed in a final section on economic instruments. A range of potential measures are analyzed, including market-based programs; voluntary agreements; regulatory measures; research, development, and demonstration (RD&D); taxes on GHG emissions; and emissions permits/quotas. It should be noted that the choice of instruments could have economic impacts on other countries.
The paper identifies and evaluates different options on the basis of three criteria. Because of the difficulty of estimating the economic and market potential (see Box 1) of different technologies and the effectiveness of different measures in achieving emission reduction objectives, and because of the danger of double-counting the results achieved by measures that tap the same technical potentials, the paper does not estimate total global emissions reductions. Nor does the paper recommend adoption of any particular approaches.
Residential, Commercial, and Institutional Buildings Sector
Global carbon dioxide (CO2) emissions from residential, commercial, and institutional buildings are projected to grow from 1.9 Gt C/yr in 1990 to 1.9-2.9 Gt C/yr in 2010, 1.9-3.3 Gt C/yr in 2020, and 1.9-5.3 Gt C/yr in 2050. While 75% of the 1990 emissions are attributed to energy use in Annex I countries, only slightly over 50% of global buildings-related emissions are expected to be from Annex I countries by 2050.
Energy-efficiency technologies for building equipment with paybacks to the consumer of 5 years or less have the economic potential to reduce carbon emissions from both residential and commercial buildings on the order of 20% by 2010, 25% by 2020, and up to 40% by 2050, relative to IS92 baselines in which energy efficiency improves.
Improvements in the building envelope (through reducing heat transfer and use of proper building orientation, energy-efficient windows, and climate-appropriate building albedo) have the economic potential to reduce heating and cooling energy in residential buildings with a 5-year payback or less by about 25% in 2010, 30% in 2020, and up to 40% in 2050, relative to IS92 baselines in which the thermal integrity of buildings improves through market forces.
The reductions can be realized through use of the following four general measures: (i) Market-based programs in which customers or manufacturers are provided technical support and/or incentives; (ii) mandatory energy-efficiency standards, applied at the point of manufacture or at the time of construction; (iii) voluntary energy- efficiency standards; and (iv) increased emphasis of private or public RD&D programs to develop more efficient products. Measures need to be carefully tailored to address market barriers. While all of the measures have some administrative and transaction costs, the overall impact on the economy will be favorable to the extent that the energy savings are cost-effective.
Total achievable reductions (market potential), not including reductions due to voluntary energy-efficiency standards, are estimated to be about 10-15% in 2010, 15-20% in 2020, and 20-50% in 2050, relative to the IS92 scenarios. Thus, total achievable global carbon emissions reductions for the buildings sector are estimated to range (based on IS92c, a, and e) from about 0.175-0.45 Gt C/yr by 2010, 0.25-0.70 Gt C/yr by 2020, and 0.35-2.5 Gt C/yr by 2050.
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.
Transport energy use resulted in emissions of 1.3 Gt C in 1990, of which Annex I countries accounted for about three-quarters. Roughly half of global emissions in 1990 came from light-duty vehicles (LDVs), a third from heavy-duty vehicles (HDVs), and most of the remainder from aircraft. In a range of scenarios of traffic growth and energy-intensity reductions, CO2 emissions increase to 1.3-2.1 Gt C by 2010, 1.4-2.7 Gt C by 2020, and 1.8-5.7 Gt C by 2050. The Annex I share decreases to about 60-70% by 2020 and further thereafter. Trucks and aircraft increase their shares in most scenarios. The transport sector is also a source of other GHGs, including nitrous oxide (N2O), chlorofluorocarbons (CFCs), and hydrofluorocarbons (HFCs). Aircraft nitrogen oxide (NOx) emissions contribute to ozone formation that may have as much radiative impact as aircraft CO2.
Energy-intensity reductions in LDVs that would give users a payback in fuel savings within 3-4 years could reduce their GHG emissions relative to projected levels in 2020 by 10-25%. The economic potential for energy-intensity reductions in HDVs and aircraft might achieve about 10% reductions in GHG emissions where applied relative to projected levels in 2020.
Controls on air-conditioning refrigerant leaks have the technical potential to reduce life-cycle greenhouse forcing due to cars by 10% in 2020. Development of catalytic converters that do not produce N2O could provide a similar reduction in forcing due to cars. Aircraft engines that produce 30-40% less NOx than current models might be technically feasible and would also reduce forcing due to air transport, although there might be a trade-off with engine efficiency, hence CO2 emissions.
Diesel, natural gas, and propane, where used in LDVs instead of gasoline, have the technical potential to reduce full-fuel-cycle emissions by 10-30%. Where alternative fuels from renewable sources are used, they have the technical potential to reduce full- fuel-cycle GHG emissions by 80% or more.
New measures would be needed to implement these technical options. Standards, voluntary agreements, and financial incentives can help to introduce energy-efficiency improvements, which might be cost-effective for vehicle users. RD&D would be needed to find means of reducing HFC, N2O, and aircraft NOx emissions, which could then be controlled through standards, although the costs of these are currently unknown.
There are several social and environmental costs associated with road transport at local, regional, and global levels. Market instruments such as road-user charges can be used to reflect many of these costs, especially those at local and regional levels. These instruments can also contribute to GHG mitigation by reducing traffic. Fuel taxes are an economically efficient means of GHG mitigation, but may be less efficient for addressing local objectives. Nevertheless, they are administratively simple and can be applied at a national level. Increases in fuel prices to reflect the full social and environmental costs of transport to its users could reduce projected road transport CO2 emissions by 10-25% by 2020 in most regions, with much larger reductions in countries where prices are currently very low. Alternative fuel incentives might deliver up to 5% reduction in projected LDV emissions in 2020, but the longer term effect might be much greater.
Changes in urban and transport infrastructure, to reduce the need for motorized transport and shift demand to less energy-intensive transport modes, may be among the most important elements of a long-term strategy for GHG mitigation in the transport sector. Packages of measures to bring about such changes would need to be developed on a local basis, in consultation with stakeholders. In some circumstances, the resulting traffic reductions can result in GHG emission reductions of 10% or more by 2020, while obtaining broad social and environmental benefits.
During the past 2 decades, the industrial sector fossil fuel CO2 emissions of most Annex I countries have declined or remained constant as their economies have grown. The reasons are different for Organization for Economic Cooperation and Development (OECD) Annex I economies which have been driven more by efficiency gains and a shift towards the service sector, and economies in transition which are undergoing large-scale restructuring and reduction in their heavy industrial sub-sectors. Global industrial emissions (including those related to manufacturing, agriculture, mining, and forestry) were 2.8 Gt C (47% of total), to which Annex I countries contributed 75%. Global industrial emissions are projected to grow to 3.2-4.9 Gt C by 2010, to 3.5-6.2 Gt C by 2020, and to 3.1-8.8 Gt C by 2050. Annex I industrial CO2 emissions are projected to either remain constant then decline by 33%, or increase by 76% by 2050 (see Tables A1-A4 in Appendix A). There are clearly many opportunities for gains in energy efficiency of industrial processes, the elimination of process gases, and the use of coordinated systems within and among firms that make more efficient use of materials, combined heat and power, and cascaded heat. Major opportunities also exist for cooperative activities among Annex I countries, and between Annex I countries and developing countries.
While standard setting and regulation have been the traditional approaches to reduce unwanted emissions, the immense range of sectors, firms, and individuals affected suggests that these need to be supplemented with market mechanisms, voluntary agreements, tax policy, and other non-traditional approaches. It will be politically difficult to implement restrictions on many GHGs, and the administrative enforcement burden and transaction costs need to be kept low. Since many firms have stated their commitment to sustainable practices, developing cooperative agreements might be a first line of approach (SAR II, 20.5; SAR III, Chapter 11).
It is estimated that Annex I countries could lower their industrial sector CO2 emissions by 25% relative to 1990 levels, by simply replacing existing facilities and processes with the most efficient technological options currently in use (assuming a constant structure for the industrial sector). If this upgraded replacement occurred at the time of normal capital stock turnover, it would be cost-effective (SAR II, SPM 4.1.1).
Energy Supply Sector
Energy consumed in 1990 resulted in the release of 6 Gt C. About 72% of this energy was delivered to end users, accounting for 3.7 Gt C; the remaining 28% was used in energy conversion and distribution, releasing 2.3 Gt C. It is technically possible to realize deep emission reductions in the energy supply sector in step with the normal timing of investments to replace infrastructure and equipment as it wears out or becomes obsolete (SAR II, SPM 4.1.3). Over the next 50-100 years, the entire energy supply system will be replaced at least twice. Promising approaches to reduce future emissions (not ordered according to priority) include more efficient conversion of fossil fuels; switching to low-carbon fossil fuels; decarbonization of flue gases and fuels, and CO2 storage; switching to nuclear energy; and switching to renewable sources of energy (SAR II, SPM 4.1.3).
The efficiency of electricity generation can be increased from the present world average of about 30% to more than 60% sometime between 2020 and 2050 (SAR II, SPM.126.96.36.199). Presently, the best available coal and natural gas plants have efficiencies of 45 and 52%, respectively (SAR II, 19.2.1). Assuming a typical efficiency of new coal-fired power generation (with de-SOx and de- NOx scrubbing equipment) of 40% in Annex I countries, an increase in efficiency of 1% would result in a 2.5% reduction in CO2 emissions (SAR II, 188.8.131.52). While the cost associated with these efficiencies will be influenced by numerous factors, there are advanced technologies that are cost-effective, comparable to some existing plants and equipment. Switching to low- carbon fossil fuels (e.g., the substitution of coal by natural gas) can achieve specific CO2 reductions of up to 50%. Decarbonization of flue gases and fuels can yield higher CO2 emission reductions of up to 85% and more, with typical decarbonization costs ranging from $80-150 per tonne of carbon avoided. Switching to nuclear and renewable sources of energy can eliminate virtually all direct CO2 emissions as well as reduce other emissions of CO2 that occur during the life-cycle of energy systems (e.g., mining, plant construction, decommissioning), with the costs of mitigation varying between negligible additional cost to hundreds of dollars per tonne of carbon avoided (SAR II, Chapter 19). Approaches also exist to reduce emissions of methane (CH4) from coal mining by 30-90%, from venting and flaring of natural gas by more than 50%, and from natural gas distribution systems by up to 80% (SAR II, 22.2.2). Some of these reductions may be economically viable in many regions of the world, providing a range of benefits, including the use of CH4 as an energy source (SAR II, 184.108.40.206).
The extent to which the potential can be achieved will depend on future cost reductions, the rate of development and implementation of new technologies, financing, and technology transfer, as well as measures to overcome a variety of non-technical barriers such as adverse environmental impacts, social acceptability, and other regional, sectoral, and country-specific conditions.
Historically, the energy intensity of the world economy has improved, on average, by 1% per year largely due to technology performance improvements that accompany the natural replacement of depreciated capital stock (SAR II, B.3.1). Improvements beyond this rate are unlikely to occur in the absence of measures. The measures discussed are grouped into five categories (not ordered according to priority): (i) Market-based programs; (ii) regulatory measures; (iii) voluntary agreements; (iv) RD&D; and (v) infrastructural measures. No single measure will be sufficient for the timely development, adoption, and diffusion of the mitigation options. Rather, a combination of measures adapted to national, regional, and local conditions will be required. Appropriate measures, therefore, reflect the widely differing institutional, social, economic, technical, and natural resource endowments in individual countries and regions.
Agriculture accounts for about one-fifth of the projected anthropogenic greenhouse effect, producing about 50 and 70%, respectively, of overall anthropogenic CH4 and N2O emissions; agricultural activities (not including forest conversion) account for approximately 5% of anthropogenic emissions of CO2 (SAR II, Figure 23.1). Estimates of the potential global reduction in radiative forcing through the agricultural sector range from 1.1-3.2 Gt C-equivalents per year. Of the total global reductions, approximately 32% could result from reduction in CO2 emissions, 42% from carbon offsets by biofuel production on land currently under cultivation, 16% from reduced CH4 emissions, and 10% from reduced emissions of N2O.
Emissions reductions by the Annex I countries could make a significant contribution to the global total. Of the total potential CO2 mitigation, Annex I countries could contribute 40% of the reduction in CO2 emissions and 32% of the carbon offset from biofuel production on croplands. Of the global total reduction in CH4 emissions, Annex I countries could contribute 5% of the reduction attributed to improved technologies for rice production and 21% of reductions attributed to improved management of ruminant animals. These countries also could contribute about 30% of the reductions in N2O emissions attributed to reduced and more efficient use of nitrogen fertilizer, and 21% of the reductions stemming from improved utilization of animal manures. Some technologies, such as no-till farming and strategic fertilizer placement and timing, already are being adopted for reasons other than concern for climate change. Options for reducing emissions, such as improved farm management and increased efficiency of nitrogen fertilizer use, will maintain or increase agricultural production with positive environmental effects.
High- and mid-latitude forests are currently estimated to be a net carbon sink of about 0.7 ± 0.2 Gt C/yr. Low-latitude forests are estimated to be a net carbon source of 1.6 ± 0.4 Gt C/yr, caused mostly by clearing and degradation of forests (SAR II, 24.2.2). These sinks and sources may be compared with the carbon release from fossil fuel combustion, which was estimated to be 6 Gt C in 1990.
The potential land area available in forests for carbon conservation and sequestration is estimated to be 700 Mha. The total carbon that could be sequestered and conserved globally by 2050 on this land is 60-87 Gt C. The tropics have the potential to conserve and sequester by far the largest quantity of carbon (80%), followed by the temperate zone (17%), and the boreal zone (3%).
Slowing deforestation and assisting regeneration, forestation, and agroforestry constitute the primary mitigation measures for carbon conservation and sequestration. Among these, slowing deforestation and assisting regeneration in the tropics (about 22-50 Gt C) and forestation and agroforestry in the tropics (23 Gt C) and temperate zones (13 Gt C) hold the most technical potential of conserving and sequestering carbon. To the extent that forestation schemes yield wood products, which can substitute for fossil fuel-based material and energy, their carbon benefit can be up to four times higher than the carbon sequestered. Excluding the opportunity costs of land and the indirect costs of forestation, the costs of carbon conservation and sequestration average between $3.7-4.6 per ton of carbon, but can vary widely across projects.
Governments in a few developing countries, such as Brazil and India, have instituted measures to halt deforestation. For these to succeed over the long term, enforcement to halt deforestation has to be accompanied by the provision of economic and/or other benefits to deforesters that equal or exceed their current remuneration. National tree planting and reforestation programs, with varying success rates, exist in many industrialized and developing countries. Here also, adequate provision of benefits to forest dwellers and farmers will be important to ensure their sustainability. The private sector has played an important role in tree planting for dedicated uses, such as paper production. It is expanding its scope in developing countries through mobilizing resources for planting for dispersed uses, such as the building and furniture industries.
Wood residues are used regularly to generate steam and/or electricity in most paper mills and rubber plantations, and in specific instances for utility electricity generation. Making plantation wood a significant fuel for utility electricity generation will require higher biomass yields, as well as thermal efficiency to match those of conventional power plants. Governments can help by removing restrictions on wood supply and the purchase of electricity.
Ongoing jointly implemented projects address all three types of mitigation options discussed above. The lessons learned from these projects will serve as important precursors for future mitigation projects. Without their emulation and replication on a national scale, however, the impact of these projects by themselves on carbon conservation and sequestration is likely to be small. For significant reds, national governments will need to institute measures that provide local and national, economic and other benefits, while conserving and sequestering carbon.
Solid Waste and Wastewater Disposal
An estimated 50-80 Mt CH4 (290-460 Mt C) was emitted by solid waste disposal facilities (landfills and open dumps) and wastewater treatment facilities in 1990. Although there are large uncertainties in emission estimates for a variety of reasons, overall emissions levels are projected to grow significantly in the future.
Technical options to reduce CH4 emissions are available and, in many cases, may be profitably implemented. Emissions may be reduced by 30-50% through solid waste source reduction (paper recycling, composting, and incineration), and through CH4 recovery from landfills and wastewater (SAR II, 220.127.116.11). Recovered CH4 may be used as an energy source, reducing the cost of waste disposal. In some cases, CH4 produced from landfills and from wastewater can be cost-competitive with other energy alternatives (SAR II, 18.104.22.168). Using the range of emissions estimates in the IS92 scenarios, this implies equivalent carbon reductions of about 55-140 Mt in 2010; 85-170 Mt in 2020; and 110-230 Mt in 2050.
Controlling CH4 emissions requires a prior commitment to waste management, and the barriers toward this goal may be reduced through four general measures: (i) Institution building and technical assistance; (ii) voluntary agreements; (iii) regulatory measures; and (iv) market-based programs. Of particular importance, in many cases the resulting CH4 reductions will be viewed as a secondary benefit of these measures, which often may be implemented in order to achieve other environmental and public health benefits.
A variety of economic instruments is available to influence emissions from more than one sector. At both the national and international levels, economic instruments are likely to be more cost-effective than other approaches to limit GHG emissions. These instruments include subsidies, taxes, and tradable permits/quotas, as well as joint implementation. These instruments will have varying effects depending on regional and national circumstances, including existing policies, institutions, infrastructure, experience, and political conditions.
National-level instruments include (i) changes in the current structure of subsidies, either to reduce subsidies for GHG-emitting activities or to offer subsidies for activities that limit GHG emissions or enhance sinks; (ii) domestic taxes on GHG emissions; and (iii) tradable permits.
Economic instruments at the international level include (i) international taxes or harmonized domestic taxes; (ii) tradable quotas; and (iii) joint implementation.
Economic instruments implemented at the national or international level require approaches to addressing concerns related to equity, international competitiveness, "free riding" (i.e., parties sharing the benefits of abatement without bearing their share of the costs), and "leakage" (i.e., abatement actions in participating countries causing emissions in other countries to increase).
With few exceptions, both taxes and tradable permits impose costs on industry and consumers. Sources will experience financial outlays, either through expenditures on emission controls or through cash payments to buy permits or pay taxes.
Permits are more effective than a tax in achieving a specified emission target, but a tax provides greater certainty about control costs than do permits. For a tradable permit system to work well, competitive conditions must exist in the permit (and product) markets. A competitive permit market could lead to the creation of futures contracts which would reduce uncertainty regarding future permit prices.
A system of harmonized domestic taxes on GHG emissions would involve an agreement about compensatory international financial transfers. To be effective, a system of harmonized domestic taxes also requires that participants not be allowed to implement policies that indirectly increase GHG emissions.
A tradable quota scheme allows each participant to decide what domestic policy to use. The initial allocation of quota among countries addresses distributional considerations, but the exact distributional implications cannot be known beforehand, since the quota price will be known only after trading begins, so protection against unfavorable price movements may need to be provided.
In applying economic instruments to limit GHG emissions at the international level, equity across countries is determined by the quota allocations in the case of tradable quota systems, the revenue sharing agreement negotiated for an international tax, or the transfer payments negotiated as part of harmonized domestic taxes on GHG emissions.
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