Climate Change 2001: Working Group III: Mitigation

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9.5 Areas for Further Research

The literature on sectoral economic costs and benefits is limited and additional research would be beneficial in all areas. Specific issues identified in this chapter (not in order of priority) include:

• Additional research on the impacts of climate change policies on the fossil fuel industries is needed. Questions include:
  • the apparent anomaly between studies indicating significant decreases in the demand for oil in Annex B countries, and studies indicating significant increases in the demand for transportation fuels, the major user of oil;
  • whether in the medium term (10 to 30 years) reserves of conventional oil are limited, which would soften the impact of climate change policies, or whether they are plentiful; and
  • whether the demand for natural gas will decrease as a result of a general decrease in the demand for fossil fuels, or increase, as a result of fuel switching from higher carbon content fuels and growth in demand in non-Annex B countries.,
• The impacts of climate change policies on the financial industries have not been analyzed. IPCC (2001) details the potential impacts, positive and negative, of climate change on the financial industries, but there appears to be no literature evaluating the degree to which mitigation policies would affect these impacts.
• The applicability of existing climate policies, and their impacts on the aviation industry and the shipping industry have not been adequately studied. Further analysis is needed to determine the efficiency, effectiveness, and equity of various policy options, particularly involving taxation, on limiting GHG emissions from aviation and shipping. This would include the difficulties involved in changing the current treaty structure to allow for the taxation of aviation fuel. The International Maritime Organization is studying GHG emissions from shipping. The International Civil Aviation Organization is currently analyzing policy options for aviation and is expected to complete its evaluation by September, 2001.
• Further study would be helpful to determine the degree to which employment growth in the industries that would benefit from climate change policies (e.g., renewable energy) would offset the decrease in employment in industries that would suffer as the result of climate change policies (e.g., fossil fuels). These studies could also consider frictional unemployment.
• More generally, an assessment is needed of how sectoral costs of mitigation can be minimized and distributed more equitably, both at the national and the global levels. Babiker et al. (2000) found that macroeconomic costs for the US increased when climate change policies excluded one or more economic sectors. However, this study did not indicate the benefits, if any, to the protected sector.
• More research is needed on the ancillary and co- benefits of GHG mitigation and other objectives of transport policies (reductions in air pollution, lower levels of traffic congestion, fewer road crashes).