Sustainability considerations are typically not the primary motivation for studies carried out from the cost-effectiveness perspective. Besides the distributional effects of climate policies, their implications for other environmental concerns can also be calculated. For example, the implied impact of climate policies on sulphur, particulate emissions, or land uses can be calculated. Sulphur emissions in some scenarios may be so high that they have major health impacts, and the land-use requirements for a global energy industry based on a very large biomass could potentially crowd out agriculture, forestry, and the recreational use of land.
As indicated in Chapter 2, the benefits and costs from a given mitigation policy depend on the baseline circumstances to which the policy is applied. The uncertainties as to what the baseline circumstances might be are vast, in the light of which it is important to evaluate the impacts of given policies relative to a range of baseline scenarios rather than to a single baseline scenario.
Human welfare and the state of the environment (which may be a determinant of human welfare, but one that is the focus of this assessment report) depend both on the baseline path and on the policy-induced departures from the baseline. A striking conclusion from Chapter 2 is that the differences in human welfare across plausible baselines can be greater than the welfare impacts of mitigation policies. That is, the nature of the baselinewhich reflects a wide range of human decisions and policies outside of the climate-policy arenacan be more important than the departures from that baseline caused by climate policy. The lower the level of baseline GHG emissions, the smaller is the effort required to achieve any specific emissions or concentration target. This does not eliminate the importance of policy actions to mitigate climate change, but it reveals the importance of developments that occur outside what is typically regarded as climate policy.
It is not surprising that changes in the economy resulting from climate policy may be small compared to changes that may occur in response to other trends in the economy and to other policies. This is so because most the GHG emissions occur in energy production, which forms a relatively low percentage of the economy (no more than 5%10%). In principle, rearranging energy use as one element of a mitigation strategy need not be a major shock to the economy if it is done efficiently. Important also is that the costs of mitigation are likely to vary substantially among nations because of both differences in baseline emissions trends and differences in flexibility to accomplish the emissions reductions required (see also Schneider (1998) on this subject).
Deciding what counts as climate policy is not always straightforward, as discussed in Chapter 2. In many policy discussions, climate-change mitigation policy is assumed to involve actions for which the primary target is a reduction in GHG concentrations. These include efforts directly aimed at reducing carbon emissions, at expanding carbon sinks, at reducing emissions of other GHGs (like methane and nitrous oxide from agriculture), and at promoting the development of new technologies and production processes that rely less on carbon-based fuels (see Chapters 3 and 4). If this is the domain of mitigation policy, then other (anticipated) actions that do not fall in this category need to be regarded, by default, as part of the baseline. However, other activities have important consequences for climate change. For example, policies oriented towards local air pollutionsuch as controls on hydrocarbon emissions from automobilesaffect levels of emissions of CO2 as well as the formation of tropospheric ozone, and thus have consequences for climate. Moreover, as discussed below, some policies, such as poverty alleviation, may ultimately have significant implications for the emissions of GHGs and are therefore extremely important to climate change.
The implications of different baseline assumptions about the future of the world reflect, in part, different assumptions about the sustainability of economic, biological, and social systems. Bringing them to bear on the analyses of mitigation opens the possibility that climate policies can be assessed within alternative worlds and that how climate policies might effect various measures of sustainability can be examined explicitly. This kind of analysis can support, though, only a limited treatment of sustainable development. A more in-depth treatment has been attempted by researchers working from the perspective of envisioning transitions to sustainability; their perspective is described in Section 1.4.
In addition to the direct benefits of GHG mitigation represented in terms of reductions in impacts resulting from climate change, the cost-effectiveness perspective also considers benefits from reductions in other pollutants4 that may accompany the GHG emission reductions. Given the focus on climate change mitigation as the primary objective the term used most often is ancillary benefits (see also Chapter 8). The term co-benefits is used for situations where climate change and other environmental or socioeconomic objectives are equally important. That notion comes more naturally from the sustainability perspective and reflects that most policies designed to address GHG mitigation also have other, often at least equally important, rationales, e.g. related to development, equity and sustainability.
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