Modelling long-term HFC emissions from India's residential air-conditioning sector: exploring implications of alternative refrigerants,best practices,and a sustainable lifestyle within an integrated assessment modelling framework

India's growing role in the global climate debate makes it imperative to analyse emission reduction policies and strategies across a range of GHGs, especially for under-researched non-CO₂ gases. Hydrofluorocarbons' (HFCs) usage in cooling equipment and subsequent emissions are expected to increase dramatically in India with the phase-out of hydrochlorofluorocarbons (HCFCs) as coolants in air-conditioning equipment. We focus on the residential air-conditioning sector in India and analyse a suite of HFC and alternative coolant gas scenarios for understanding the implications for GHG emissions from this sector within an integrated assessment modelling framework. We find that, if unabated, HFC410A emissions will contribute to 36% of the total global warming impact from the residential air-conditioner sector in India in 2050, irrespective of the future economic growth trajectory, and the remaining 64% is from energy to power residential air-conditioners. A move towards more efficient, low global warming potential (GWP) alternative refrigerants will significantly reduce the cumulative global warming footprint of this sector by 37% during the period 2010–2050, due to gains both from energy efficiency as well as low GWP alternatives. Best practices for reducing direct emissions are important, but only of limited utility, and if a sustainable lifestyle is adopted by consumers with lower floorspace, low GWP refrigerants, and higher building envelope efficiencies, cumulative emissions during 2010–2050 can be reduced by 46% compared to the Reference scenario.

Policy relevance

Our analysis has important implications for Indian climate policy. We highlight that the Indian government's amendment proposal to the Montreal Protocol is a strong signal to the Indian market that the transition away from high GWP refrigerants towards low/zero GWP alternatives will happen sooner or later. The Bureau of Energy Efficiency should extend building energy conservation code policy to residential buildings immediately, and the government should mandate it. Government authorities should set guidelines and mandate reporting of data related to air-conditioner coolant recharge frequency and recovery of scrapped air-conditioner units. For contentious issues like flammability where there is no consensus within the industry, the government needs to undertake an independent technical assessment that can provide unbiased and reliable information to the market.     

Sustainable development policies and measures: institutional issues and electrical efficiency in South Africa

An innovative approach is introduced for helping developing countries to make their development more sustainable, and also to reduce greenhouse gas (GHG) emissions as a co-benefit. Such an approach is proposed as part of the multilateral framework on climate change. The concept of sustainable development policies and measures (SD-PAMs) is outlined, making clear that it is distinct from many other approaches in starting from development rather than explicit climate targets. The potential of SD-PAMs is illustrated with a case-study of energy efficiency in South Africa, drawing on energy modelling for the use of electricity in industry. The results show multiple benefits both for local sustainable development and for mitigating global climate change. The benefits of industrial energy efficiency in South Africa include significant reductions in local air pollutants; improved environmental health; creation of additional jobs; reduced electricity demand; and delays in new investments in electricity generation. The co-benefit of reducing GHG emissions could result in a reduction of as much as 5% of SA's total projected energy CO₂ emissions by 2020. Institutional support and policy guidance is needed at both the international and national level to realize the potential of SD-PAMs. This analysis demonstrates that if countries begin to act early to move towards greater sustainability, they will also start to bend the curve of their emissions path.     

Role of renewable energy in climate mitigation: a synthesis of recent scenarios

The role of renewable energy in climate change mitigation is explored through a review of 162 recent medium- to long-term scenarios from 15 large-scale, energy-economic and integrated assessment models. The current state of knowledge from this community is assessed and its implications drawn for the strategic context in which policymakers and other decision-makers might consider renewable energy. The scenario set is distinguished from previous ones in that it contains more detailed information on renewable deployment levels. All the scenarios in this study were published during or after 2006. Within the context of a large-scale assessment, the analysis is guided primarily by four questions. What sorts of future levels of renewable energy deployment are consistent with different CO₂ concentration goals? Which classes of renewable energy will be the most prominent energy producers and how quickly might they expand production? Where might an expansion in renewable energy occur? What is the linkage between the costs of mitigation and an expansion of renewable energy?     

Assessing decarbonization pathways and their implications for energy security policies in Japan

For countries without sufficient fossil fuel resources such as Japan, climate policies in the mid- to long term need to satisfy requirements not only for decarbonisation but also for energy security in the context of limitations on renewable energies and nuclear power. This study assesses the feasibility of decarbonization pathways to 2050 and their effects on energy security, considering the latest energy and climate policies in Japan using the AIM/Enduse model. The analysis illustrates that deep decarbonization by 2050 is technically feasible even without nuclear power based on three elements: energy efficiency improvements, low-carbon electricity and electrification in end-use sectors. These decarbonization pathways, in the long term, could also contribute to enhanced energy security, reducing import dependency to less than a half of the total primary energy and reducing import bills for fossil fuels by around 70% compared with the current level. Notably, renewable energies could play a strategically significant role in satisfying both climate and energy security requirements. In the mid-term (to 2030), however, although GHG emissions are reduced by 14–20% from 1990 levels, import dependency is relatively stable at today's levels, particularly without the restart of nuclear power. Given the limited potential for renewable energies in the mid-term, it is suggested that the availability of nuclear power will have negative impacts on carbon intensity and energy security, and policies to enhance the security of fossil fuels, including diversification of fuel sources and supply routes, will be required for the foreseeable future.

Policy relevance

Considering the scarcity of indigenous fossil fuel resources and the uncertain availability of nuclear power in Japan, renewable energy could play a strategically significant role in replacing unabated fossil fuels, which would contribute to satisfying both climate and energy security requirements in the long term. However, the renewable energy potential is insufficient to eliminate the requirement for fossil fuels by 2030; therefore the unavailability of nuclear power would affect energy security considerably. Thus, policies in the mid-term would still require enhancement of the energy security of fossil fuels, including the diversification of fuel sources and supply routes, as well as alleviation of the impacts of price volatility.     

Brazil beyond 2020: from deforestation to the energy challenge

The main assumptions and findings are presented on a comparative analysis of three GHG long-term emissions scenarios for Brazil. Since 1990, land-use change has been the most important source of GHG emissions in the country. The voluntary goals to limit Brazilian GHG emissions pledged a reduction in between 36.1% and 38.9% of GHG emissions projected to 2020, to be 6–10% lower than in 2005. Brazil is in a good position to meet the voluntary mitigation goals pledged to the United Nations Framework Convention on Climate Change (UNFCCC) up to 2020: recent efforts to reduce deforestation have been successful and avoided deforestation will form the bulk of the emissions reduction commitment. In 2020, if governmental mitigation goals are met, then GHG emissions from the energy system would become the largest in the country. After 2020, if no additional mitigation actions are implemented, GHG emissions will increase again in the period 2020–2030, due to population and economic growth driving energy demand, supply and GHG emissions. However, Brazil is in a strong position to take a lead in low-carbon economic and social development due to its huge endowment of renewable energy resources allowing for additional mitigation actions to be adopted after 2020.

Policy relevance

The period beyond 2020 is now relevant in climate policy due to the Durban Platform agreeing a ‘protocol, legal instrument or agreed outcome with legal force’ that will have effect from 2020. After 2020, Brazil will be in a situation more similar to other industrialized countries, faced with a new challenge of economic development with low GHG energy-related emissions, requiring the adoption of mitigation policies and measures targeted at the energy system. Unlike the mitigation actions in the land-use change sector, where most of the funding will come from the national budgets due to sovereignty concerns, the huge financial resources needed to develop low-carbon transport and energy infrastructure could benefit from soft loans channelled to the country through nationally appropriate mitigation actions (NAMAs).     

GDP and employment effects of policies to close the 2020 emissions gap

Four policies might close the gap between the global GHG emissions expected for 2020 on the basis of current (2013) policies and the reduced emissions that will be needed if the long-term global temperature increase can be kept below the 2 °C internationally agreed limit. The four policies are (1) specific energy efficiency measures, (2) closure of the least-efficient coal-fired power plants, (3) minimizing methane emissions from upstream oil and gas production, and (4) accelerating the (partial) phase-out of subsidies to fossil-fuel consumption. In this article we test the hypothesis of the International Energy Agency (IEA) that these policies will not result in a loss of gross domestic product (GDP) and we estimate their employment effects using the E3MG global macro-econometric model. Using a set of scenarios we assess each policy individually and then consider the outcomes if all four policies were implemented simultaneously. We find that the policies are insufficient to close the emissions gap, with an overall emission reduction that is 30% less than that found by the IEA. World GDP is 0.5% higher in 2020, with about 6 million net jobs created by 2020 and unemployment reduced.

Policy relevance

The gap between GHG emissions expected under the Copenhagen and Cancun Agreements and that needed for emissions trajectories to have a reasonable chance of reaching the 2 °C target requires additional policies if it is to be closed. This article uses a global simulation model E3MG to analyse a set of policies proposed by the IEA to close the gap and assesses their macroeconomic effects as well as their feasibility in closing the gap. It complements the IEA assessment by estimating the GDP and employment implications separately by the different policies year by year to 2020, by major industries, and by 21 world regions.     

Integrating agriculture and energy to assess GHG emissions reduction: a methodological approach

Agriculture is responsible for approximately 25% of anthropogenic global GHG emissions. This significant share highlights the fundamental importance of the agricultural sector in the global GHG emissions reduction challenge. This article develops and tests a methodology for the integration of agricultural and energy systems modelling. The goal of the research is to extend an energy systems modelling approach to agriculture in order to provide richer insights into the dynamics and interactions between the two (e.g. in competition for land-use). We build Agri-TIMES, an agricultural systems module using the TIMES energy systems modelling framework, to model the effect of livestock emissions and explore emissions reduction options. The research focuses on Ireland, which is an interesting test case for two reasons: first, agriculture currently accounts for about 30% of Ireland's GHG emissions, significantly higher than other industrialized countries yet comparable with global levels (here including emissions associated with other land-use change and forestation); second, Ireland is both a complete and reasonably sized agricultural system to act as a test case for this new approach. This article describes the methodology used, the data requirements, and technical assumptions made to facilitate the modelling. It also presents results to illustrate the approach and provide associated initial insights.

Policy relevance

Most of the policy focus with regard to climate mitigation targets has been on reducing energy-related CO₂ emissions, which is understandable as they represent by far the largest source of emissions. Non-energy-related GHG emissions – largely from agriculture, industrial processes, and waste – have received significantly less attention in policy discourse. Going forward, however, if significant cuts are made in energy-related CO₂ emissions, the role of non-energy-related GHG emissions will grow in importance. It is therefore crucial that climate mitigation analyses and strategies are not limited to the energy system. This article shows the value of using integrated energy and agriculture techno-economic modelling techniques to draw evidence for new comprehensive climate policy strategies able to discern between the full range of technical solutions available. It enables the production of economy-wide least-cost climate mitigation pathways.     

Combining price and quantity instruments: insights from South Africa

A carbon tax will form the central carbon pricing instrument in South Africa. The country, however, is also in the process of setting specific short-term emissions limits at a subnational level. Additional mitigation policy instruments will thus be required to meet these targets. Although it is possible to combine sector-level quantity targets with a broad-based carbon tax, this article finds that this greatly complicates mitigation policy design, increasing both the information requirements and the likelihood of unintended consequences. The trade-offs between economic efficiency (optimized by the use of a broad-based price set by a carbon tax) and environmental effectiveness (optimized by using instruments that ensure emissions reduction targets are met) are ever present. A clear understanding of subnational quantity targets and an appreciation of the characteristics of the instruments to achieve such targets (quantity-based instruments, QBIs), the framework through which the instruments are combined, and their possible interactions, are required for effective policy making. Three possible frameworks for combining instruments are identified in the article, and some specific implications of interaction between particular QBIs and a carbon tax are suggested.

Policy relevance

This article explores the interaction of a carbon tax with mitigation policy instruments to meet subnational emissions targets in the South African context (where both a carbon tax and subnational emissions targets are currently being developed). As international negotiations progress towards countries accepting binding GHG emissions restrictions, quantity-based mitigation policy approaches become more important. In countries where a broad-based emissions trading scheme (ETS) is not feasible in the short to medium term, combining a broad-based carbon tax with subnational emission targets provides an alternative mechanism for achieving the economic efficiency and emissions certainty benefits derived from an ETS. This paper considers the mechanisms through which such a combination of instruments can be achieved. Three possible frameworks for combining instruments are identified, some specific implications of interaction between particular QBIs and a carbon tax are suggested, and guidelines and concept tools are presented to assist policy-makers in designing efficient and coherent mitigation policy.     

Climate change mitigation scenarios and policies and measures: the case of Kazakhstan

This article illustrates the main difficulties encountered in the preparation of GHG emission projections and climate change mitigation policies and measures (P&M) for Kazakhstan. Difficulties in representing the system with an economic model have been overcome by representing the energy system with a technical-economic growth model (MARKAL-TIMES) based on the stock of existing plants, transformation processes, and end-use devices. GHG emission scenarios depend mainly on the pace of transition in Kazakhstan from a planned economy to a market economy. Three scenarios are portrayed: an incomplete transition, a fast and successful one, and even more advanced participation in global climate change mitigation, including participation in some emission trading schemes. If the transition to a market economy is completed by 2020, P&M already adopted may reduce emissions of CO₂ from combustion by about 85 MtCO₂ by 2030 – 17% of the emissions in the baseline (WOM) scenario. One-third of these reductions are likely to be obtained from the demand sectors, and two-thirds from the supply sectors. If every tonne of CO₂ not emitted is valued up to US$10 in 2020 and $20 in 2030, additional P&M may further reduce emissions by 110 MtCO₂ by 2030.     

Greenhouse gas emission mitigation plan for the State of Israel: strategies,incentives and reporting

In the context of the negotiations under the United Nations Framework Convention on Climate Change and its accompanying Kyoto Protocol, participating nations have recognized the need for formulating Nationally Appropriate Mitigation Actions (NAMAs). These NAMAs allow countries to take into account their national circumstances and to construct measures to mitigate GHG emissions across economic sectors. Israel has declared to the UN that it would strive to reduce its GHG emissions by 20% in the year 2020 relative to a ‘business as usual' scenario. With its growing population and an expanding economy, the national GHG mitigation plan was developed to draw a course for steering the Israeli economy into a low-carbon future while accommodating continued economic growth. The article describes relevant policy measures, designed to aid in the implementation of the plan and compares them with measures being undertaken by different countries. Emphasis is placed on analysing the progress to date, opportunities and barriers to attaining the ultimate GHG emissions reduction goals. The objective of this article is to contribute to the knowledge base of effective approaches for GHG emissions reduction. We emphasize the integrated approach of planning and implementation that could be especially useful for developing countries or countries with economies in transition, as well as for developed countries. Yet, in the article we argue that NAMAs’ success hinges on structured tracking of progress according to emerging global consensus standards such as the GHG Protocol Mitigation Goals Standard.

Policy relevance:

The study is consistent with the NAMA concept, enabling a country to adopt a ‘climate action plan’ that contributes to its sustainable development, while enabled by technology and being fiscally sound.

The analysis shows that although NAMAs have been framed in terms of projects, policies, and goals, current methodologies allow only the calculation of emission reductions that can be attributed to distinct projects. Currently, no international guidance exists for quantifying emissions reduction from policy-based NAMAs, making it difficult to track and validate progress. This gap could be addressed by an assessment framework that we have tested, as part of a World Resources Institute pilot study for an emerging voluntary global standard.     

Creating a mutual gains climate regime through universal clean energy services

Climate change is a serious threat to all nations. This raises the question of why continuous treaty negotiations for more than two decades have failed to create a viable or adequate international climate regime. The current strategy of addressing climate change misdiagnoses the issue as a pollution problem by focusing on symptoms (emissions) and not on underlying causes (unsustainable development). In short, the wrong treaty is being negotiated. Drawing on negotiation analysis, it is argued that the existing and proposed climate treaties fail to meet the national interests of any party. An alternative strategy for addressing climate change is proposed that reframes the overall approach to reflect all countries’ development needs and links climate protection goals to the development structure of the treaty. The current deadlock over emissions reductions might be overcome and a mutual gains agreement reached by directing international cooperation towards promoting the provision of clean energy services for development and ensuring universal access to those services as part of an ‘early action’ agenda that will complement efforts to utilize forests and reduce other GHGs from multiple sectors.     

Health co-benefits and the development of climate change mitigation policies in the European Union

The 2015 Paris Agreement requires increasingly ambitious emissions reduction efforts from its member countries. Accounting for ancillary positive health outcomes (health co-benefits) that result from implementing climate change mitigation policies can provide Parties to the Paris Agreement with a sound rationale for introducing stronger mitigation strategies. Despite this recognition, a knowledge gap exists on the role of health co-benefits in the development of climate change mitigation policies. To address this gap, the case study presented here investigates the role of health co-benefits in the development of European Union (EU) climate change mitigation policies through analysis and consideration of semi-structured interview data, government documents, journal articles and media releases. We find that while health co-benefits are an explicit consideration in the development of EU climate change mitigation policies, their influence on final policy outcomes has been limited. Our analysis suggests that whilst health co-benefits are a key driver of air pollution mitigation policies, climate mitigation policies are primarily driven by other factors, including economic costs and energy implications.

Key policy insights

• Health co-benefits are quantified and monetized as part of the development of EU climate change mitigation policies but their influence on the final policies agreed upon is limited.

• Barriers, such as the immediate economic costs associated with climate action, inhibit the influence of health co-benefits on the development of mitigation policies.

• Health co-benefits primarily drive the development of EU air pollution mitigation policies.

• The separation of responsibility for GHG and non-GHG emissions across Directorate Generals has decoupled climate change and air pollution mitigation policies, with consequences for the integration of health co-benefits in climate policy.

     

Alignment between nationally determined contributions and the sustainable development goals for West Africa

The UN Sustainable Development Goals (SDGs) and the 2015 Paris Agreement are two of the most important policy frameworks of the twenty-first century. However, the alignment of national commitments linked to them has not yet been analysed for West African states. Such analyses are vital to avoid perverse outcomes if states assess targets and develop SDG implementation plans, and Nationally Determined Contributions (NDC) under the Paris Agreement, without integrated planning and cross-sectoral alignment. This article provides a situation analysis guided by the following questions: (a) Which priority sectors are mentioned in relation to adaptation and mitigation in West African NDCs? (b) Are the NDCs of West African states well aligned with the SDGs? (c) What are the co-benefits of NDCs in contributing towards the SDGs? and (d) How are West African states planning to finance actions in their NDCs? The study uses iterative content analysis to explore key themes for adaptation and mitigation within NDCs of 11 West African states and their alignment to selected SDGs. A national multi-stakeholder workshop was held in Ghana to examine the co-benefits of the NDCs in contributing towards the SDGs and their implementation challenges. Results show that agriculture and energy are priority sectors where NDCs have pledged significant commitments. The analysis displays good alignment between mitigation and adaptation actions proposed in NDCs and the SDGs. These represent opportunities that can be harnessed through integration into national sectoral policies. However, cross-sectoral discussions in Ghana identify significant challenges relating to institutional capacity, a lack of coordination among institutions and agencies, and insufficient resources in moving towards integrated implementation of national planning priorities to address successfully both NDC priorities and the SDGs.

Key policy insights

• Positive alignments between West African NDCs and SDGs present opportunities for mutual benefits that can advance national development via a more climate resilient pathway.

• NDCs of West African states can provide mutual benefits across the water–energy–food nexus, such as through climate-smart agriculture and low carbon energy technologies.

• Ghanaian multi-sectoral insights show the need to empower national coordinating bodies to overcome misalignments across different sectors.

     

Towards a low-carbon economy: scenarios and policies for the UK

This article analyses the implications of long-term low-carbon scenarios for the UK, and against these it assesses both the current status and the required scope of the UK energy policy. The scenarios are generated using the well-established MARKAL (acronym for MARKet ALlocation) UK energy systems model, which has already been extensively used for UK policy analysis and support. The scenarios incorporate different levels of ambition for carbon reduction, ranging from 40% to 90% cuts from 1990's level by the year 2050, to shed insights into the options for achieving the UK's current legally binding target of an 80% cut by the same date. The scenarios achieve their carbon reductions through very different combinations of demand reduction (implying behaviour change) and implementation of low-carbon and energy efficiency technologies on both the supply and demand sides. In all cases, however, the costs of achieving the reductions are relatively modest. The ensuing policy analysis suggests that while the cuts are feasible both technically and economically and while a number of new policies have been introduced in order to achieve them, it is not yet clear whether these policies will deliver the required combination of both short- and long-term technology deployment, and behaviour change for the UK Government's targets to be achieved.     

Sustainable energy development and climate change in China

Abstract

This article analyses the national circumstances and major factors underpinning China's energy demand and supply, energy-related emissions, and consequently China's sustainable development. These factors include the huge, still growing, and aging population, rapid economic growth, ongoing industrialization and urbanization, environmental and health concerns at local, regional and global level. Against such background analysis, the article explores the potential and constraints of non-fossil fuel, fuel-switching to natural gas, economy restructuring and clean coal technology in mitigating emissions of greenhouse gases (GHG) and ensuring energy supply in China. The authors reiterate the importance of improving energy efficiency in China and discuss how to integrate renewable energy into rural development. The article concludes with an in-depth discussion about redefining development goals, the equity issue in climate change process, and the linkage with sustainable development.     

Linkages between climate change and sustainable development

Abstract

Climate change does not yet feature prominently within the environmental or economic policy agendas of developing countries. Yet evidence shows that some of the most adverse effects of climate change will be in developing countries, where populations are most vulnerable and least likely to easily adapt to climate change, and that climate change will affect the potential for development in these countries. Some synergies already exist between climate change policies and the sustainable development agenda in developing countries, such as energy efficiency, renewable energy, transport and sustainable land-use policies. Despite limited attention from policy-makers to date, climate change policies could have significant ancillary benefits for the local environment. The reverse is also true as local and national policies to address congestion, air quality, access to energy services and energy diversity may also limit GHG emissions. Nevertheless there could be significant trade-offs associated with deeper levels of mitigation in some countries, for example where developing countries are dependent on indigenous coal and may be required to switch to cleaner yet more expensive fuels to limit emissions. The distributional impacts of such policies are an important determinant of their feasibility and need to be considered up-front. It follows that future agreements on mitigation and adaptation under the convention will need to recognise the diverse situations of developing countries with respect to their level of economic development, their vulnerability to climate change and their ability to adapt or mitigate. Recognition of how climate change is likely to influence other development priorities may be a first step toward building cost-effective strategies and integrated, institutional capacity in developing countries to respond to climate change. Opportunities may also exist in developing countries to use regional economic organisations to assist in the design of integrated responses and to exploit synergies between climate change and other policies such as those designed to combat desertification and preserve biodiversity.

© 2002 Elsevier Science Ltd. All rights reserved.     

Energy-intensive manufacturing sectors in China: policy priorities for achieving climate mitigation and energy conservation targets

In this study, a long-range energy alternative planning (LEAP) model was built to evaluate the relative priority of three kinds of policies expected to be implemented for the energy-intensive manufacturing sectors (EIMS) in China to achieve CO₂ mitigation and energy conservation targets. These policies encourage (1) the use of more electricity instead of coal; (2) the continuous improvement of energy efficiency; and (3) a shift to other less energy-demanding sectors. The results indicate that the policy of shifting economic activity from the EIMS to other sectors is most helpful for China to achieve its targets of mitigating CO₂ emissions and conserving energy. Encouraging the EIMS to use more electricity can help China to achieve a higher proportion of non-fossil-fuel based energy in its overall primary energy consumption. No single policy will allow China to achieve all the targets, emphasizing the need for an integrated policy design that combines all types of policies.

Key policy insights

• The policy of encouraging a shift to less energy intensive industries should receive the highest priority in aiming to peak China's energy-related CO₂ emissions as early as possible, and lower overall CO₂ emissions, coal consumption and primary energy consumption in the long run.

• Encouraging a shift to electricity should go hand-in-hand with greater energy efficiency, otherwise such a policy cannot help China significantly reduce energy-related CO₂ emissions.

• Encouraging the EIMS to use more electricity should receive the highest priority in helping China achieve a higher proportion of non-fossil-fuel based energy in its overall primary energy consumption.

     

Climate change and total factor productivity in the Tanzanian economy

The economic impacts of climate-change-induced adjustments on the performance of the Tanzanian economy are analysed, using a countrywide computable general equilibrium (CGE) model. The effect of overall climate change on agricultural productivity (modelled as reduced land productivity) is projected to be relatively limited until about 2030, thereafter becoming worse. The simulation results indicate that despite the projected reduction in agricultural productivity, the negative impacts can potentially be quite limited. This is because the timescales involved, as well as the low starting point of the economy, leave ample room for factor substitutability and increased overall productivity. This indicates that policies that give farmers the opportunity to invest in autonomous climate adaptation, as well as those that improve the overall performance of the economy, can be as important in reducing the impacts of climate change in the economy as direct government policies for adaptation.     

Community forest management in Mexico: carbon mitigation and biodiversity conservation through rural development

Forest management is an important carbon mitigation strategy for developing countries. As demonstrated by the case of Mexico, community forest management is especially effective because it offers tangible local benefits while conserving forests and sequestering carbon. Community forestry receives minimal government support now, but the clean development mechanism (CDM) of the Kyoto Protocol could leverage additional resources to promote the approach in Mexico and elsewhere. We argue that adequately designed and implemented, community forestry management projects can avoid deforestation and restore forest cover and forest density. They comprise promising options for providing both carbon mitigation and sustainable rural development. These kinds of projects should be included in the CDM.     

The role of money and the financial sector in energy-economy models used for assessing climate and energy policy

This article outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate and energy policy, which could lead to misleading information being used for policy-making. We show that the Computable General Equilibrium (CGE) models that are typically used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. These assumptions lead to ‘crowding out’ of capital and, because of the way the models are constructed, negative economic impacts (in terms of gross domestic product (GDP) and welfare) from climate policy in virtually all cases.

In contrast, macro-econometric models, which follow non-equilibrium economic theory and adopt a more empirical approach, apply a treatment of the financial system that is more consistent with reality. Although these models also have major limitations, they show that green investment need not crowd out investment in other parts of the economy – and may therefore offer an economic stimulus. Our conclusion is that improvements in both modelling approaches should be sought with some urgency – both to provide a better assessment of potential climate and energy policy and to improve understanding of the dynamics of the global financial system more generally.

POLICY RELEVANCE

This article discusses the treatment of the financial system in the macroeconomic models that are used in assessments of climate and energy policy. It shows major limitations in approach that could result in misleading information being provided to policy-makers.