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IPCC Synthesis Report Part IV Costs of mitigation measures Jayant Sathaye Technologies and policies exist to reduce short-term (2010-2020) GHG emissions • Significant technical progress has been made in the last 5 years and at a faster rate than expected (wind turbines, elimination of industrial byproducts, hybrid engine cars, fuel cell technology, underground carbon dioxide storage) Production costs (EURO1990/kWh) Cost of new technologies have declined steeply, but costs of conventional technologies have also declined at a slower rate 10 Solar Wind 1 Biomass 0.1 Natural gas Combined Cycle Advanced Coal 0.01 100 10000 1000000 Cumulative Installed Capacity (MW) Electric technologies, EU 1980-1995, Source: IEA Mitigation potential -- 2020 (Cost Range: Negative to $100/t C) Realizing this potential requires overcoming many barriers • Barriers add to the cost of implementation, and reduce the realizable potential • Removal of barriers during capital stock turnover and periods of rapid social change can minimize disruption and mitigation costs Quantification of barriers remains a challenge Mititgation Potential Physical potential Knowledge gap High costs Technological potential Values, attitudes, social barriers Socio-economic potential Market failures Economic potential Market potential Time GDP losses and marginal costs of compliance with Kyoto targets vary across Annex II regions but can be reduced substantially through emissions trading Other issues can further affect costs • The inclusion of carbon sinks, other greenhouse gases, ancillary benefits, and targeted revenue recycling will further reduce costs. • On the other hand, models under-estimate costs because they assume (1) full efficient emissions trading without transaction costs, and (2) economies begin to adjust between 1990 and 2000 to meet Kyoto targets. Interpreting results of models of the global economy • The wide differences in estimated costs depend on the modelling approach and assumptions about – Energy technology improvements – Fuel mix changes – Baselines -- no-regrets opportunities. • The same costs give the appearance of being high or low depending on the GDP metric – Absolute amounts, e.g., trillions $ – % GDP change in target year, or – Percentage change in GDP growth rates over the study period Long-term stabilization (2100++) of greenhouse gas concentrations • Known technological options could achieve stabilization of carbon dioxide at levels of 450550 ppm over the next 100 years • Technology development and diffusion are important components of cost-effective stabilization • The pathway to stabilization and the stabilization level itself are key determinants of mitigation costs The cost of compliance increases with lower stabilization levels Projected mitigation costs are sensitive to the assumed emissions baseline Resource data may imply a change in the energy mix and the introduction of new sources of energy during the 21st century Stabilization will require emissions reductions globally • The lower the stabilization level or the higher the baseline scenario, the earlier and the deeper the reductions • Approaches to mitigate climate change will be both affected by, and have impacts on, broader socio-economic policies and trends, those relating to development, sustainability and equity