Module 4 Barriers to Mitigation a Concepts b

Module 4 Barriers to Mitigation a. Concepts b. Sectoral Barriers c. Overcoming Barriers 1

Module 4 a Concepts 2

Introduction • • • Numerous technologies and policies exist to reduce GHG emissions. Significant technical progress has been made in the last 5 years in areas such as wind turbines, hybrid engine cars, underground CO 2 storage, etc. But significant barriers exist. Barriers add to the cost of implementation, and reduce the realizable potential Barriers can be technical, economic, political, cultural, social, behavioral and institutional. Potential Global GHG Emission Reductions Adapted from IPCC TAR– Mitigation. Table SPM, 1 3

Mitigation Potential 4

Opportunities for Mitigation Differ by Region • In industrialized countries, opportunities lie primarily in removing social and behavioral barriers; • In countries with economies in transition, opportunities lie primarily in price rationalization; • In developing countries, opportunities lie primarily in price rationalization, increased access to data and information, availability of advanced technologies, financial resources, and training and capacity building. • NB: These three categories of countries are not homogenous. • Opportunities for any given country might be found in the removal of any combination of barriers. 5

The Concept of Barriers “The transfer of technologies and practices that have the potential to reduce greenhouse gas (GHG) emissions is often hampered by barriers that slow their penetration” [IPCC, 2001 Mitigation: Working Group III to the Third Assessment Report] • A barrier is any obstacle to reaching a potential that can be overcome by a policy, programme, or measure. • An opportunity is a situation or circumstance to decrease the gap between the market potential of a technology or practice and the economic, socioeconomic, or technological potential. • Barriers and opportunities tend to be context-specific, and can change over time and vary across countries. Policies, programmes, and measures may be used to help overcome barriers. 6

Sources of Barriers and Opportunities Barriers categories or areas… 1. 2. 3. 4. 5. 6. 7. prices financing trade and environment market structure institutional frameworks Information provision social, cultural and behavioral norms and aspirations Within each of these areas, barriers and opportunities represent: – failures or imperfections in markets, policies, or other institutions that lie between the market potential and the possible achievement of the economic potential – Other barriers are aspects of institutions or social and cultural systems that separate the economic and socioeconomic potentials. 7

Module 4 b Sectoral Barriers 8

Sectors Considered 1. 2. 3. 4. 5. 6. 7. Buildings Transport Industry Energy Supply Forestry Solid Waste Agriculture 9

Key Barriers in the Buildings Sector • • • Traditional customs Lack of skills Behavior and style Social barriers Misplaced incentives Lack of financing Market structure Administratively set prices Economic pricing Imperfect information 10

Key Barriers in the Transport Sector • • • Infrastructure Lifestyles Economic Development Patterns of industrial production Consumer behavior Status value Lock-in technology Subsidies Distorted perceptions 11

Key Barriers in the Industry Sector • • • Lack of information Limited Capital Availability Lack of skilled personnel Decision making process Energy prices and subsidies 12

Key Barriers in the Energy Supply Sector • • • Energy Prices Inconsistency in evaluation of energy costs Lack of adequate financial support Institutional transformation and reforms Legal and regulatory frameworks Lack of information Decision making process and behavior Social and cultural constraints Capital availability Lack of internalization of environmental externalities 13

Key Barriers in the Forestry Sector • Lack of technical capability • Lack of capacity for monitoring carbon stocks • Poor practices such as slash and burn agriculture and mismanagement of forest resources 14

Key Barriers in the Solid Waste Sector • Lack of enabling policies initiatives, institutional mechanism, information and opportunities • Organizational problems in collection and transport • Lack of coordination among different groups 15

Key Barriers in the Agriculture Sector • • • Farm-level adoption constraints Government subsidies Lack of capacity and skills Lack of information Property rights 16

Module 4 c Overcoming Barriers 17

Overcoming Barriers • • • Overcoming barriers requires a wide variety of policies, measures and instruments. Removal of barriers during capital stock turnover and periods of rapid social change can minimize disruption and mitigation costs. National responses to climate change can be more effective if deployed as a portfolio of policy instruments to limit or reduce greenhouse gas emissions. Effectiveness can be enhanced when climate policies are integrated with the non-climate objectives of national and sectoral policy development (e. g. , sustainable development). Coordinated actions among countries and sectors may help to reduce mitigation cost, address competitiveness concerns, potential conflicts with international trade rules, and carbon leakage. Nevertheless, earlier actions, including a portfolio of emissions mitigation, technology development and reduction of scientific uncertainty, increase flexibility in moving towards stabilization of atmospheric concentrations of greenhouse gases. 18

Overcoming Barriers: Sectoral Level • Market based instruments (taxes, tradable permits, subsidies, deposit/refund systems) • Standards, product bans, energy mix requirements • Voluntary agreements • Information, and labeling programs • Government investment/ R&D spending • Sectoral options only as effective as allowed by macro conditions 19

Overcoming Barriers: International and Macro Levels • Macro policies: Some examples: – – – Reform of the legal system Creation of open and competitive markets Enhancing physical and communications infrastructure Improve land tenure Improve macro-economic stability • International co-ordination can address competitiveness, international trade rules, and “leakage” • Setting appropriate macro-conditions can contribute more to mitigation than improving sectoral policies, measures, and instruments. • IPCC shows a major gap in research: few studies identify barriers and ways to overcome them, or estimate the cost of their removal. 20

Overcoming Barriers: Special Challenges for Developing Countries • Appropriate financing • Market Segmentation: small firms face information and market-structure barriers. • Developing strong communication channels 21

Opportunities For Overcoming Barriers • Seeking synergies between competitiveness and GHG mitigation (e. g. , when GHG mitigation could reduce costs) • Communication among firms, between firms and users, or universities or government labs. • Good communication strategies (marketing) may encourage consumer acceptance of new technologies. • Economic, regulatory, and social incentives for reducing GHG emissions will also act as incentives for innovation to find new means of mitigation. • Introduce low-emission technology, when previously locked-in technology begins to change. • Changes in the market and legislative context can also provide opportunities for innovation. 22

Examples of Barriers and Opportunities Source of barrier and/or opportunity Examples of market and/or institutional imperfections (and opportunities)a Prices Missing markets (market creation) Distorted prices (rationalization of prices, environmental regulations and taxes) Financing Financial market imperfections (sector reform or restructuring of economy) Constraints of official development assistance (ODA) (removing tied aid and/or better targeting of ODA) Trade and environment Tariffs on imported equipment and restrictive regulations (rationalization of customs tariffs) Market structure and functioning Institutional frameworks Transactions costs Inadequate property rights (improve land tenure) Misplaced incentives Distorted incentives Information provision Public goods nature of information (increase public associations) Adoption externality (build demonstration projects) Social, cultural, and behavioural norms and aspirations Examples of social & cultural barriers (and opportunities) Long time and high transaction costs for small projects (pooling of projects) Circumstances requiring rapid payback (fuel subsides) Weaknesses of suppliers in market research (form associations to support market research) Institutional structure and design (restructuring of firms) National policy styles (shifting balance of authority) Lack of effective regulatory agencies (informal regulation) Inadequate consideration of human motivations and goals in climate mitigation (modify social behaviour) Individual habits (targeted advertising) a Remarks in parenthesis indicate opportunities, e. g. , missing markets denote an opportunity for the creation of markets. 23

Overcoming Sectoral Barriers: Buildings • • • Voluntary programs Building efficiency standards Equipment efficiency standards Demand-side management (DSM) programs Financing programs Government procurement Tax credits Accelerated R&D Carbon cap and trade schemes 24

Overcoming Sectoral Barriers: Transport • • Fuel taxes Charges on road users, including parking fees, road taxes, license fees, and insurance premiums Shifting local government spending towards public transport and away from private transport. Fiscal and regulatory measures and public purchasing aimed at developing larger markets for low- GHG-emission vehicles plus international co-operation Implementing planning measures that encourage more sustainable transport patterns, avoiding the pollution, congestion, higher accident rates, and GHG emissions associated with cars. Introduce toll rings around big or medium sized cities, Moving away from zoning and car-based transport, and towards multifunction, high-density pedestrian zones Effective mitigation strategies would entail combinations of measures for overcoming the many forms of inertia and lock-in. 25

Overcoming Sectoral Barriers: Industry • • • Technology diffusion policies: there is no single instrument to reduce barriers; instead, an integrated policy accounting for the characteristics of technologies, stakeholders, and countries addressed would be helpful. Information programmes designed to assist energy consumers in understanding and employing technologies and practices to use energy more efficiently. Best Practice’ programmes aimed to improve information on energy efficient technologies, demonstration projects and information dissemination, Energy audit programmes, among others. Environmental legislation can be a driving force in the adoption of new technologies. Direct subsidies and tax credits or other favorable tax treatments. Financial incentive programmes leading to large impacts on energy efficiency 26

Overcoming Sectoral Barriers: Energy Supply • • • Multilateral cooperation is especially important for the development of hydropower programmes, regional interconnections, and developing small renewable technologies (e. g. , mini hydro, solar, and wind). A reduction in nuclear or hydro unit size and/or improved safety could help to overcome the capital availability barrier. Greater regional co-operation among developing countries in both research and development, and the development of an international commercial contracting network, to improve technology transfer. Accounting for the needs of potential users, and harmonizing diffusion strategies with local physical, human, and institutional resources, while building local technical and institutional capabilities. Expansion of electricity supply systems, while improving the efficiency of new capacity. Promoting commercialization of excess electricity production (e. g. from Industrial CHP) through better regulated access to existing grid systems. 27

Overcoming Sectoral Barriers: Agriculture • Farm-level Adoption Constraints, participatory arrangements that fully engage all the involved actors may help to overcome many barriers. • The expansion of internationally supported credit and savings schemes, and price support, to assist rural people. • Shifts in the allocation of international agricultural research. • The improvement of food security and disaster early warning systems. • The development of institutional linkage between countries with high standards in certain technologies, for example flood control. • The rationalization of input and output prices of agricultural commodities taking DES issues into consideration which would lead to more efficient use of input resources. 28

Overcoming Sectoral Barriers: Forestry • Forestry sector options are relatively low cost compared to those in the energy sector, which helps to reduce barriers. • Promotion of mitigation projects also automatically promotes the flow of technology • Independent verification of C abatement would help to increase the credibility and funding of forestry-sector mitigation projects. 29

Overcoming Sectoral Barriers: Solid Waste • A multi-pronged approach is needed which should include the following components: – Building up of databases on availability of wastes, their characteristics, distribution, accessibility, current practices of utilization and/or disposal technologies and their economic viability; – An institutional mechanism for technology transfer though a coordinated program involving the R&D institutions, financing agencies, and industry (Schwarz, 1997); and – Defining the role of stakeholders including local authorities, individual house holders, NGOs, industries, R&D institutions, and the government. 30

Module 4 c Examining Barriers During a Mitigation Assessment 31

Examining Barriers During a Mitigation Assessment • Mitigation assessment should include information on the barriers and opportunities for implementation. • Useful to identify main implementation requirements including: – Financial support – Assessment of technology options for the different mitigation options in various sectors – Institutional capacity-building to sustain mitigation work – Regulation policies – Further improvements of the national decision framework 32

Possible Topics for Discussion • How can the concepts of mitigation potential (market, economic, social, technological) and barriers best be incorporated into a mitigation assessment? • What approaches might be used for modeling mitigation potential? 33