10.4.3 When Should the Response Be Made? Factors Influencing the Relationships
between the Near-term and Long-term Mitigation Portfolio
A broad range of mitigation responses can be conceived. However, the bulk of
attention, in both the analytical and policy arenas, has been devoted to reducing
the emission of GHGs from anthropogenic sources and to removing the CO2
(the most important GHG) already in the atmosphere by enhancing the biophysical
processes that capture it. The timing of these efforts depends partly on the
climatic constraints to be observed and on the costs of these actions, which
are subject to change over time. Even with an exact knowledge of the timing
and consequences of the future impacts of climate change, policymakers will
still be faced with difficult choices regarding the implementation of response
options. This is because the costs, availability, and associated impacts of
future mitigation options are uncertain, and the choices involve trade-offs
with important competing environmental and other social objectives. Chapter
8 discusses the costs of different
pathways towards a fixed stabilization objective, and notes factors which would
favour a larger proportion of preparatory activities relative to mitigation
per se as well as factors that favour early mitigation. This section considers
the wider context relating to climate change risks and damages.
Inertia and Uncertainty
Various attempts have been made over the past few years to explore these questions.
Arguments that favour a larger fraction of preparatory activities (developing
technologies, building institutions, and the like), rather than emission reductions
in the near-term mitigation portfolio, include losses from the early retirement
of installed capital stock, technological development, the optimal allocation
of resources over time (discounting effect), and the carbon cycle premium (Wigley
et al., 1996). See Chapter 8 for a detailed discussion.
Table 10.7 summarizes the most important arguments brought
forward in favour of modest and stringent emissions reduction in the near term.
|Table 10.7: Balancing the near-term mitigation portfolio
||Favouring modest early abatement
||Favouring stringent early abatement
- Energy technologies are changing and improved versions of existing
technologies are becoming available, even without policy intervention.
- Modest early deployment of rapidly improving technologies allows learning-curve
cost reductions, without premature lock-in to existing, low-productivity
- The development of radically advanced technologies will require investment
in basic research.
- Availability of low-cost measures may have substantial impact on emissions
- Endogenous (market-induced) change could accelerate development of
low-cost solutions (learning-by-doing).
- Clustering effects highlight the importance of moving to lower emission
- Induces early switch of corporate energy R&D from fossil frontier
developments to low carbon technologies.
|Capital stock and inertia
- Beginning with initially modest emissions limits avoids premature
retirement of existing capital stocks and takes advantage of the natural
rate of capital stock turnover.
- It also reduces the switching cost of existing capital and prevents
rising prices of investments caused by crowding out effects.
- Exploit more fully natural stock turnover by influencing new investments
from the present onwards.
- By limiting emissions to levels consistent with low CO2
concentrations, preserves an option to limit CO2 concentrations
to low levels using current technology.
- Reduces the risks from uncertainties in stabilization constraints
and hence the risk of being forced into very rapid reductions that would
require premature capital retirement later.
|Social effects and inertia
- Gradual emission reduction reduces the extent of induced sectoral
unemployment by giving more time to retrain the workforce and for structural
shifts in the labour market and education.
- Reduces welfare losses associated with the need for fast changes in
peoples lifestyles and living arrangements.
- Especially if lower stabilization targets would be ultimately required,
stronger early action reduces the maximum rate of emissions abatement
required subsequently and reduces associated transitional problems,
disruption and the welfare losses associated with the need for faster
later changes in peoples lifestyles and living arrangements.
|Discounting and intergenerational equity
- Reduces the present value of future abatement costs (ceteris paribus),
but possibly reduces future relative costs by furnishing cheap technologies
and increasing future income levels.
- Reduces impacts and (ceteris paribus) reduces their present
|Carbon cycle and radiative change
- Small increase in near-term, transient CO2 concentration.
- More early emissions absorbed, thus enabling higher total carbon emissions
this century under a given stabilization constraint (to be compensated
by lower emissions thereafter).
- Small decrease in near-term, transient CO2 concentration.
- Reduces peak rates in temperature change.
|Climate change impacts
- Little evidence about damages from multidecade episodes of relatively
rapid change in the past.
- Avoids possibly higher damages caused by faster rates of climate change.
In addition to those emphasized by Wigley et al. (1996; see above), other arguments
are proposed that support less stringent near-term emission reductions as well.
Most refer to the significant inertia in economic systems. The first argument
below is related to the economic lifetime of already installed capital stock.
The second points to the possibility of low-cost mitigation technologies becoming
available in the future.
Wigley et al. (1996) refer to the inertia of the capital stock. Researchers
also identified other fields of inertia such as technological developments and
lifestyles. The essential point of inertia in economic structures and processes
is that it incurs costs to deviate from it and these costs rise with the speed
of deviation. Such changes are often irreversible. The costs stem from premature
retirement of the capital stock, sectoral unemployment, switching cost of existing
capital, and rising prices of scarce investment goods. Emissions reduction in
the present influences the marginal abatement cost in the future. The inertia
of technological development arises from the path dependence. The capital stock
can be divided into three parts. First, end-use equipment with a relatively
short lifetime can be replaced within a few years. Second, infrastructure, buildings,
and production processes can be replaced in up to 50 years. Structures of urban
form and urban land-use can only be changed over 100 years. The demand and supply
of goods and services in these three domains are interrelated in a complex way
(Grubb et al., 1995; Grubb, 1997; Jaccard et al., 1997).
Continues on next page