Vital Climate Graphics - Update

At what cost?

The Kyoto Protocol is only a first step towards combating climate change. Drastic reductions of greenhouse gas emissions are required to avoid the most threatening consequences of global warming. Concerns are raised that the price for the economy will be too high, but studies indicate that there will only be a small reduction in GDP to reach the Kyoto targets and that it is possible to stabilize the concentration of CO2 at low costs.

Small losses in GDP
The GDP loss in OECD countries of Europe will in 2010, be 0.13–0.81% if carbon trading is implemented. If carbon trading is not implemented, the loss will be 0.31–1.50%.

For the US the loss would be 0.42–1.96% if carbon trading is not implemented and 0.24–0.91% if it is implemented.

For most economies in transition, GDP effects range from negligible to a several percent increase, reflecting opportunities for energy-efficiency improvements not available to other Annex I countries. Under assumptions of drastic energy-efficiency improvement and/or continuing economic recessions in some countries, the assigned amounts may exceed projected emissions in the first commitment period. In this case, models show increased GDP due to revenues from trading assigned amounts. However, for some economies in transition, implementing the Kyoto Protocol will have similar impact on GDP as for other Annex I countries.

It is possible to stabilize concentrations at low costs.
Global average GDP might be reduced by 1–4% if we reduce the emissions of CO2 so that we stabilize the concentration in the atmosphere at 450 ppmv. In 2003 the concentration was 375 ppmv. If we stabilise at higher concentration levels, the GDP reduction will be less.

The projected mitigation scenarios do not take into account potential benefits of avoided climate change.

Cost-effectiveness studies with a century time scale estimate that the mitigation costs of stabilizing CO2 concentrations in the atmosphere increase as the concentration stabilization level declines. Different baselines can have a strong influence on absolute costs. While there is a moderate increase in the costs when passing from a 750 to a 550 ppmv concentration stabilization level, there is a larger increase in costs passing from 550 to 450 ppmv unless the emissions in the baseline scenario are very low.

Although model projections indicate long-term global
growth paths of GDP are not significantly affected by mitigationactions towards stabilization, these do not show thelarger variations that occur over some shorter time periods,sectors, or regions. These results, however, do not incorporate carbon sequestration, and did not examine the possible effect of more ambitious targets on induced technological change. Costs associated with each concentration level depend on numerous factors including the rate of discount, distribution of emission reductions over time, policies and measures employed, and particularly the choice of the baseline scenario. For scenarios characterized by a focus on local and regional sustainable development for example, total costs of stabilizing at a particular level are significantly lower than for other scenarios. Also, the issue of uncertainty takes on increasing importance as the time frame is expanded.

Although model projections indicate long-term global growth paths of GDP are not significantly affected by mitigation actions towards stabilization, these do not show the larger variations that occur over some shorter time periods, sectors, or regions. These results, however, do not incorporate carbon sequestration, and did not examine the possible effect of more ambitious targets on induced technological change. Costs associated with each concentration level depend on numerous factors including the rate of discount, distribution of emission reductions over time, policies and measures employed, and particularly the choice of the baseline scenario. For scenarios characterized by a focus on local and regional sustainable development for example, total costs of stabilizing at a particular level are significantly lower than for other scenarios. Also, the issue of uncertainty takes on increasing importance as the time frame is expanded.