Climate Change 2001:
Working Group III: Mitigation
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5.5 Regional Aspects

There are many barriers and opportunities, from the ones described before, which have a particular relevance to developing countries and EITs. The issues of sustainable and equitable development resonate in these countries as they undergo a rapid transformation towards market-oriented systems that are immersed in a global economy. Institutionally, the transformation in developing countries is significant, but it is often confined to specific sectors, such as the deregulation of the energy sector. On the other hand, the socialist economies are undergoing a more radical shift of the whole economy. These global patterns of change provide an opportunity for introducing GHG mitigation technologies and practices that are consistent with DES goals. At the macro-level the change to a market economy and the liberalization and opening of markets to foreign investment provides an opportunity to make significant improvements in the GHG intensity of the economy. Similarly, the restructuring of the energy sectors also offers an opportunity to introduce demand management and low or no GHG-emitting energy sources. As the sections below note, however, a culture of energy subsidies, institutional intertia, fragmented capital markets, vested interests, etc. presents major barriers to the introduction of such technologies and practices. The developed countries face different types of barriers and opportunities that prevent or slow the penetration of GHG mitigation technologies. These barriers and opportunities are related to their more affluent lifestyles. The sections below emphasize situations in the three groups of countries that call for a more careful consideration of the barriers and opportunities they face.

5.5.1 Developing Countries

As a group, the developing countries are undergoing rapid urbanization, which leads to increased industrialization and motorization that has altered the manner in which people relate to their environment (Rabinovitch, 1992). Much of their technology stock is derived from developed countries, and increased globalization tends to expose even remote populations to socio-cultural patterns observed in the developed countries. Yet, the majority of the population in these countries lives in rural areas, and often in absolute poverty. These underlying attributes and phenomena create or emphasize barriers and opportunities that are particular to this group of countries.

Trade and Environment
A larger external debt and balance-of-payments (BoP) deficit is a reality in many developing countries. If a GHG mitigation technology has to be imported, it is likely to add to this debt and BoP deficit. Another barrier to the technology transfer process is the requirement in technology transfer contracts of “intellectual property rights” (IPR), which guarantee that private firms are compensated for sharing their technology. If IPR laws are not effectively enforced, there is little incentive for private firms to share their technology. However, patents and licensing fees can be very expensive and in such situations, developing countries may prefer the lowest priced, albeit possibly less efficient technology alternatives (Srivastava and Dadhich, 1999).

Institutional Framework
Deregulation and privatization offer an opportunity for improving energy efficiency and reducing GHG emissions in the energy sector. Studies and scenario analyses show, however, a consequent increase in emissions resulting from low fuel prices, displacement of hydro and nuclear plants by cheaper fossil-fired capacity, and a change in attitudes and behaviour of the energy suppliers (Bouille, 1999).

Distorted Energy Prices
Energy price subsidies have been in place in many developing countries in the name of reducing the financial burden on the poor. This has spawned a culture of dependency on energy subsidies that is gradually diminishing (Jochem, 1999).

Lack of available capital and lack of finance at low interest rates is pervasive in developing countries. Together with the absence of standards or energy labeling schemes, these barriers support the proliferation of inefficient equipment and first-cost-minimization philosophy. Additionally, low incomes and poverty constrain access to adequate finance, and oblige the purchase of inexpensive and often GHG-intensive equipment (Bouille, 1999). Provision of special funds targeted to the poor and government financing of the first cost of equipment are ways to increase the provision of energy services.

Information gap hindering proper technology selection, lack of adaptation and absorption capability, lack of access to state of the art technology, and the small scale of many projects (Jochem, 1999) are specific and important barriers in low income developing countries to effectively exploit the full potential benefit of technology transfer. Lack of information also slows the decision-making processes in developing countries.

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