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29
Findings and Recommendations

In the previous chapters, the Mitigation Panel has discussed various options for responding to the emission of greenhouse gases to the atmosphere. Here the panel has organized that material within the framework of the charge it received to evaluate the effectiveness of various policies that could potentially mitigate greenhouse warming. No attempt has been made to judge whether action to mitigate greenhouse warming should be taken. If through the political process, however, the United States decides to attempt to mitigate greenhouse warming, it should do so as efficiently as possible, with a broad appreciation of the alternatives available, their potential effectiveness, and the implications of their implementation. This means (1) taking a global perspective with respect to possible actions, (2) assembling the best information available about the cost per ton of CO2-equivalent reductions, and (3) evaluating other costs and benefits of prospective actions.

The panel again emphasizes that substantial uncertainties cloud all the numerical estimates summarized in this chapter. The degree of uncertainty varies greatly, but in many important instances such as the large-scale "geoengineering" alternatives, it is so large that even relative judgments must be made tentatively. More generally, the assembly of information in this report should be regarded as useful primarily for comparing large families of options, and not as specific recommendations of steps to be taken without additional analysis, research, or empirical study.

U.S. Mitigation Policy

United States policy toward greenhouse gas mitigation is important for a number of reasons. First, the United States is currently the largest emitter



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Page 465 29 Findings and Recommendations In the previous chapters, the Mitigation Panel has discussed various options for responding to the emission of greenhouse gases to the atmosphere. Here the panel has organized that material within the framework of the charge it received to evaluate the effectiveness of various policies that could potentially mitigate greenhouse warming. No attempt has been made to judge whether action to mitigate greenhouse warming should be taken. If through the political process, however, the United States decides to attempt to mitigate greenhouse warming, it should do so as efficiently as possible, with a broad appreciation of the alternatives available, their potential effectiveness, and the implications of their implementation. This means (1) taking a global perspective with respect to possible actions, (2) assembling the best information available about the cost per ton of CO2-equivalent reductions, and (3) evaluating other costs and benefits of prospective actions. The panel again emphasizes that substantial uncertainties cloud all the numerical estimates summarized in this chapter. The degree of uncertainty varies greatly, but in many important instances such as the large-scale "geoengineering" alternatives, it is so large that even relative judgments must be made tentatively. More generally, the assembly of information in this report should be regarded as useful primarily for comparing large families of options, and not as specific recommendations of steps to be taken without additional analysis, research, or empirical study. U.S. Mitigation Policy United States policy toward greenhouse gas mitigation is important for a number of reasons. First, the United States is currently the largest emitter

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Page 466 of greenhouse gases. As such, should greenhouse warming require active intervention, the United States has a responsibility to do its part to reduce greenhouse emissions, and unilateral action could contribute significantly to a reduction in the rate of emission growth. However, the U.S. role in greenhouse warming, although large (approximately 20 percent of worldwide CO2-equivalent emissions), is not so large that unilateral action could stabilize global climate. At least a 60 percent reduction in current worldwide CO2-equivalent emissions would be needed for stabilization, according to the Intergovernmental Panel on Climate Change (Intergovernmental Panel on Climate Change, 1991). As discussed in Chapter 28, geoengineering options may be able to reduce the amount of reduction required, but international agreement and participation in such actions would be necessary in order to undertake such action on a planetary scale. Second, U.S. policy and technology will affect the inclination and capability of other nations to respond to greenhouse warming. The U.S. policy is of instrumental importance, both in meeting our potential national responsibilities within the world community and in leading constructive change in that community. The large magnitude and long time scale of potential adjustments imply that any response will require a coherent and sustained commitment on a global scale. What is needed is not a single national policy, but a long-term strategic perspective on greenhouse warming and its implications for the world economy. Third, developing countries are unlikely to be able to respond to the potential threat of greenhouse warming at the same level as industrialized countries. The United States should not focus exclusively on interventions within its own boundaries because greenhouse warming is a global issue and emission reduction in one country could be as beneficial as in another. It may be appropriate for the United States and other industrial economies to seek low-cost opportunities for reducing greenhouse gas emissions in developing countries, or to provide economic and technological support, through the political process, should these countries decide that such actions are warranted. Three basic premises are central to the panel's comparison of different mitigation policy options. • First, possible responses to greenhouse warming should be regarded as investments in the future of the nation and the planet. That is, the actions needed would have to be implemented over a long time. They should be evaluated as investments, in comparison with other claims on the nation's resources, bearing in mind their often widespread implications for the economy. • Second, cost-effectiveness is an essential guideline. The changes in energy, industrial practice, land use, agriculture, and forestry that might be implemented to limit greenhouse gas emissions, or the use of geoengineering options, imply an investment effort lasting several generations and large enough to affect the macroeconomic profile of the country. Costs of climate policy therefore need to be considered as a central element. A sensible guideline is cost-effectiveness: obtaining the largest reductions in greenhouse gas emissions at the lowest cost to society. Positive or negative effects of any mitigation option on societal factors not related to greenhouse warming must also be taken into account.

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Page 467 • Third, a mixed strategy is essential. The magnitude of the economic changes at stake, together with the need to pursue a cost-effective approach, implies that a mixed strategy, employing a variety of measures, would be required. This simple observation complicates the task of analysis and policy design, however, because a mixed strategy that is cost-effective can be designed and implemented only through comparisons of activities in different sectors of the economy. Categories of Mitigation Options A brief description of the mitigation options analyzed by the Mitigation Panel is shown in Table 29.1. In its comparison of different options, the panel examined several factors. The first of these was cost-effectiveness—how much reduction the United States can get in greenhouse warming for each dollar spent. By using the index of dollars per ton of CO2 equivalent, the panel was able to contrast not only the mitigation options that affect CO2 emissions, but also those that address emissions of halocarbons, N2O, and CH4.1 As noted in Chapter 20, cost-effectiveness was evaluated using four different discount rates: 3, 6, 10, and 30 percent. Options that do not involve emission reductions, but would seek to reduce the level of greenhouse gases already in the atmosphere or to compensate for their climatic effects, were also reviewed. These "geoengineering options" have been converted to CO2 emission reduction equivalence so that they can be compared with emission reduction options. The comparison is made by using the objective of climate stabilization rather than emission reduction per se. In the case of the geoengineering options, the cost-effectiveness was annualized for comparison purposes but was not discounted. This is because the panel felt that these options were so futuristic in nature that discounting would provide these "back of the envelope" cost estimates a degree of accuracy not available at the current time. Assessment of the anticipated magnitude of climatic effects and appraisal of their impact on society have been the work of the Effects and Adaptation Panels (Parts Two and Four). That work builds a basis for informed judgments of the appropriate magnitude and rate of mitigation. Barriers to implementing these mitigation options are also a major concern. Although it may be technically possible to achieve emission reduction

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Page 468 TABLE 29.1 Brief Descriptions of Mitigation Options Considered in This Study for the United States RESIDENTIAL AND COMMERCIAL ENERGY MANAGEMENT (CHAPTER 21) Electricity efficiency measures     White surfaces/vegetation Reduce air conditioning use and the urban heat island effect by 25% through planting vegetation and painting roofs white at 50% of U.S. residences.   Residential lighting Reduce lighting energy consumption by 50% in all U.S. residences through replacement of incandescent lighting (2.5 inside and 1 outside light bulb per residence) with compact fluorescents.   Residential water heating Improve efficiency by 40 to 70% through efficient tanks, increased insulation, low-flow devices, and alternative water heating systems.   Commercial water heating Improve efficiency by 40 to 60% through residential measures mentioned above, heat pumps, and heat recovery systems.   Commercial lighting Reduce lighting energy consumption by 30 to 60% by replacing 100% of commercial light fixtures with compact fluorescent lighting, reflectors, occupancy sensors, and daylighting.   Commercial cooking Use additional insulation, seals, improved heating elements, reflective pans, and other measures to increase efficiency 20 to 30%.   Commercial cooling Use improved heat pumps, chillers, window treatments, and other measures to reduce commercial cooling energy use by 30 to 70%.   Commercial refrigeration Improve efficiency 20 to 40% through improved compressors, air barriers and food case enclosures, and other measures.   Residential appliances Improve efficiency of refrigeration and dishwashers by 10 to 30% through implementation of new appliance standards for refrigeration, and use of no-heat drying cycles in dishwashers.   Residential space heating Reduce energy consumption by 40 to 60% through improved and increased insulation, window glazing, and weather stripping along with increased use of heat pumps and solar heating.   Commercial and industrial Space heating Reduce energy consumption by 20 to 30% using measures similar to that for the residential sector.   Commercial ventilation Improve efficiency 30 to 50% through improved distribution systems, energy-efficient motors, and various other measures. (continued on page 469)

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Page 469 (Table 29.1 continued from page 468) Oil and gas efficiency Reduce residential and commercial building fossil fuel energy use by 50% through improved efficiency measures similar to the ones listed under electricity efficiency. Fuel switching Improve overall efficiency by 60 to 70% through switching 10% of building electricity use from electric resistance heat to natural gas heating. INDUSTRIAL ENERGY MANAGEMENT (CHAPTER 22) Co-generation Replace existing industrial energy systems with an additional 25,000 MW of co-generation plants to produce heat and power simultaneously. Electricity efficiency Improve electricity efficiency up to 30% through use of more efficient motors, electrical drive systems, lighting, and industrial process modifications. Fuel efficiency Reduce fuel consumption up to 30% by improving energy management, waste heat recovery, boiler modifications, and other industrial process enhancements. Fuel switching Switch 0.6 quadsa of current coal consumption in industrial plants to natural gas or oil. New process technology Increase recycling and reduce energy consumption primarily in the primary metals, pulp and paper, chemicals, and petroleum refining industries through new, less energy intensive process innovations. TRANSPORTATION ENERGY MANAGEMENT (CHAPTER 23) Vehicle efficiency     Light vehicles Use technology to improve on-road fuel economy to 25 mpg (32.5 mpg in CAFEb terms) with no changes in the existing fleet.     Improve on-road fuel economy to 36 mpg (46.8 mpg CAFE) with measures that require changes in the existing fleet such as downsizing.   Heavy trucks Use measures similar to that for light vehicles to improve heavy truck efficiency up to 14 mpg (18.2 mpg CAFE).   Aircraft Implement improved fanjet and other technologies to improve fuel efficiency by 20% to 130 to 140 seat-miles per gallon. (continued on page 470)

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Page 470 (Table 29.1 continued from page 469) Alternative fuels     Methanol from biomass Replace all existing gasoline vehicles with those that use methanol produced from biomass.   Hydrogen from nonfossil fuels Replace gasoline with hydrogen created from electricity generated from nonfossil fuel sources.   Electricity from nonfossil fuels Use electricity from nonfossil fuel sources such as nuclear and solar energy directly in transportation vehicles. Transportation demand management Reduce solo commuting by eliminating 25% of the employer-provided parking spaces and placing a tax on the remaining spaces to reduce solo commuting by an additional 15%. ELECTRICITY AND FUEL SUPPLY (CHAPTER 24) Heat rate improvements Improve heat rates (efficiency) of existing plants by up to 4% through improved plant operation and maintenance. Advanced coal Improve overall thermal efficiency of coal plants by 10% through use of integrated gasification combined cycle, pressurized fluidized-bed, and advanced pulverized coal combustion systems. Natural gas Replace all existing fossil-fuel-fired plants with gas turbine combined cycle systems to both improve thermal efficiency of current natural gas combustion systems and replace fossil fuels such as coal and oil that generate more CO2 than natural gas. Nuclear Replace all existing fossil-fuel-fired plants with nuclear power plants such as advanced light-water reactors. Hydroelectric Replace fossil-fuel-fired plants with remaining hydroelectric generation capability of 2 quads. Geothermal Replace fossil-fuel-fired plants with remaining geothermal generation potential of 3.5 quads. Biomass Replace fossil-fuel-fired plants with biomass generation potential of 2.4 quads. Solar photovoltaics Replace fossil-fuel-fired plants with solar photovoltaics generation potential of 2.5 quads. Solar thermal Replace fossil-fuel-fired plants with solar thermal generation potential of 2.6 quads. (continued on page 471)

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Page 471 (Table 29.1 continued from page 470) Wind Replace fossil-fuel-fired plants with wind generation potential of 5.3 quads. CO2 disposal Collect and dispose of all CO2 generated by fossil-fuel-fired plants into the deep ocean or depleted gas and oil fields. NONENERGY EMISSION REDUCTION (CHAPTER 25) Halocarbons     Not-in-kind Modify or replace existing equipment to use non-CFC materials as cleaning and blowing agents, aerosols, and refrigerants.   Conservation Upgrade equipment and retrain personnel to improve conservation and recycling of CFC materials.   HCFC/HFC-aerosols, etc. Substitute cleaning and blowing agents and aerosols with fluorocarbon substitutes.   HFC-chillers Retrofit or replace existing chillers to use fluorocarbon substitutes.   HFC-auto air conditioning Replace existing automobile air conditioners with equipment that utilizes fluorocarbon substitutes.   HFC-appliance Replace all domestic refrigerators with those using fluorocarbon substitutes.   HCFC-other refrigeration Replace commercial refrigeration equipment such as that used in supermarkets and transportation with that using fluorocarbon substitutes.   HCFC/HFC-appliance insulation Replace domestic refrigerator insulation with fluorocarbon substitutes. Agriculture (domestic)     Paddy rice Eliminate all paddy rice production.   Ruminant animals Reduce ruminant animal production by 25%.   Nitrogenous fertilizers Reduce nitrogenous fertilizer use by 5%. Landfill gas collection Reduce landfill gas generation by 60 to 65% by collecting and burning in a flare or energy recovery system. GEOENGINEERING (CHAPTER 28) Reforestation Reforest 28.7 Mha of economically or environmentally marginal crop and pasture lands and nonfederal forest lands to sequester 10% of U.S. CO2 emissions. (continued on page 472)

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Page 472 (Table 29.1 continued from page 471) Sunlight screening     Space mirrors Place 50,000 100-km2 mirrors in the earth's orbit to reflect incoming sunlight.   Stratospheric dustc Use guns or balloons to maintain a dust cloud in the stratosphere to increase the sunlight reflection.   Stratospheric bubbles Place billions of aluminized, hydrogen-filled balloons in the stratosphere to provide a reflective screen.   Low stratospheric dustc Use aircraft to maintain a cloud of dust in the low stratosphere to reflect sunlight.   Low stratospheric sootc Decrease efficiency of burning in engines of aircraft flying in the low stratosphere to maintain a thin cloud of soot to intercept sunlight.   Cloud stimulationc Burn sulfur in ships or power plants to form sulfate aerosol in order to stimulate additional low marine clouds to reflect sunlight. Ocean biomass stimulation Place iron in the oceans to stimulate generation of CO2-absorbing phytoplankton. Atmospheric CFC removal Use lasers to break up CFCs in the atmosphere. a1 quad = 1 quadrillion Btu = 1015 Btu. bCorporate average fuel economy. cThese options cause or alter chemical reactions in the atmosphere and should not be implemented without careful assessment of their direct and indirect consequences. to a given level, the necessary actions might not be taken for any number of social, economic, or political reasons. For example, some actions that are economically sensible will not be undertaken by households and firms because they involve up-front costs and the households or firms face liquidity constraints that make them unwilling or unable to undertake the investment. In these cases, it could be desirable to find some institutional mechanism to overcome the constraints. In the case of energy efficiency, for example, the natural focus for such changes is builders, manufacturers, and utilities (i.e., the providers of electric power and natural gas). They are, in principle, in a position to make credit available, directly or indirectly, to purchasers who are constrained in their decisions by inadequate liquidity. Yet institutions may also face obstacles to moving to best practice or encouraging their customers to do so. Thus building codes are typically out of date and may limit local builders from incorporating the latest proven energy-saving materials in construction. In most states, public

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Page 473 utility pricing formulas reward public utilities for building new power plants, but not for investments that conserve energy. Examples exist in many areas. It should be remembered, however, that some of these ''constraints" serve other social objectives. For example, there are many reasons people drive their cars to work instead of taking mass transit, and many reasons they select large, less-efficient vehicles. The reasons may lie in time saved, safety, or personal flexibility, but in each case energy conservation is not the only social objective that enters into the decision process. Altering long-standing practices is rarely easy—even if such changes may bring economic as well as potential climatic benefits. Many of the potential climate interventions, of course, have effects other than merely reducing atmospheric CO2 or its equivalent. Some of these effects will be positive, others negative, and some will have different effects on different parts of society. It is also important to remember that these inquiries occur on a planet where the population is still increasing and most of the inhabitants aspire to a higher standard of living. Therefore another important factor in analyzing various mitigation policies involves the costs and benefits (beyond implementation) that are likely to occur should the mitigation action be taken. Thus some low-cost options will be unattractive on other grounds, while some high-cost actions will provide additional benefits. In the present study the Mitigation Panel has barely touched on issues such as the barriers to implementation and the social, environmental, and economic implications of the strategies investigated. The panel hopes that the mention of these issues in this analysis through the use of the categories described below will contribute to their visibility and raise them to a higher level of consideration in more detailed studies later. The panel has tried to be qualitatively sensitive to these issues and to discourage direct dollar comparisons of options with widely different external implications. These three factors—cost-effectiveness, implementation obstacles, and other costs and benefits—suggested the categories for analysis. The three categories of options are as follows: • Category 1 options: "Best-practice" mitigation options available at little or no net cost that are not fully implemented due to various implementation obstacles. • Category 2 options: Mitigation options that are either relatively costly or face implementation obstacles not fully represented in the implementation cost. They may also have other benefits and costs not fully represented. • Category 3 options: Mitigation options that appear to be feasible with the current, limited state of knowledge. They may, with additional investigation, research, and development, provide the ability to change atmospheric concentrations of greenhouse gases, or radiative forcing, and the ultimate impact of greenhouse warming on a substantial scale.

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Page 474 In none of the categories have full institutional costs been estimated. This is important because most Category 1 options, particularly the ones estimated to produce net savings, require institutional changes before they become available to buyers and sellers of goods and services that release greenhouse gases. The costs of changing these institutional barriers are unknown. Without an appraisal of institutional costs, any comparison is incomplete; such an appraisal has not been done in this report. The panel believes it has provided a framework within which these appraisals can be made in future studies. A major rationale for discussing options under three categories is that the panel not believe the full range of options should be compared on a simple monetary scale. In Tables 29.2 to 29.7 the panel summarizes the mitigation strategies that have been reviewed using the three categories. Although the menu of options reviewed is not intended to provide an inventory of all possibilities, it seeks to identify the most promising options. The panel hopes that it provides the beginnings of a structure and a process for identifying those strategies that could appropriately respond to the prospect of greenhouse warming. Category 1 Options Every progressive society finds its economic activities on average falling short of best practice in most areas. This is because new practices are being contrived continually and it takes time for them to diffuse throughout the economy. Thus every progressive society enjoys opportunities for improving its overall situation by reducing the gap between average practice and best practice. Obstacles to more rapid diffusion of better practice include lack of information, lack of opportunity (e.g., if stores do not stock the improved products), political resistance, capital investment, risk aversion, and simple human inertia. Cost of replacement is also an obstacle, but one that disappears as old equipment wears out and renewal becomes necessary. Within organizations, better practices may not be introduced because of divisions in responsibility, for example, if those making the decisions to go ahead do not get credit for the benefits that flow from the new practice (e.g., "maintenance" pays for the light bulbs, but "operations" pays the electric bills). Thus there are typically many improvements that "ought" to be undertaken, and most of them will be undertaken, eventually, because they are in the interests of those undertaking them. These decisions can be hastened by providing information and opportunity. Heightened awareness will encourage stores to stock improved products, top management to review the division of responsibilities within their firms, and so on. The general proposition that economic activities fall short of best practice

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Page 475 applies to every area of the economy. Many opportunities for reducing greenhouse gas emissions will also improve economic well-being, because they are more efficient than prevailing practices, judged in conventional terms. These "no-regrets" actions show up in Table 29.2 as measures with a net savings or very low cost. This negative cost does not imply that no expenditure is required to implement these actions, but rather that the real rate of return to the initial investment in making the change exceeds the common societal discount rates. However, as discussed in Chapters 21 and 22, households and firms do not have perfect information, and they are often observed to behave as if a 30 percent rate of return were needed to invest in one of these options. Therefore a column with a 30 percent discount rate has been added to illustrate what some households or firms seek in the marketplace prior to investment. As shown here, even at a 30 percent discount rate (well above their rate of return for other investment opportunities), firms and households will still receive a benefit for investment in many of these options. In other words, these "movement to best practice" actions involve attractive rates of return and would be undertaken voluntarily in many cases. However, as discussed in Chapters 21, 22, and 23, the timing can be accelerated if information, technical assistance, and financing can be provided. Category 2 Options As shown in Table 29.3, there are actions to reduce greenhouse gas emissions, or compensate for their climatic effects, that are either economically costly in the sense that the nation or the world must reduce its future income to reduce the potential for climate change, must face implementation obstacles, or will encounter additional benefits and costs not fully reflected in the implementation cost. The panel has tried to make rough estimates of the costs of reducing carbon in the atmosphere through various actions. The range of costs is wide, varying from well under $1/t CO2 equivalent reduction to over $500/t. As discussed in Chapter 25, reduction in CFC consumption can also help reduce stratospheric ozone depletion. In another case of issues beyond current cost, the information in Chapter 24 indicates that solar energy is relatively costly now, but anticipated technological developments may lower the price substantially—perhaps making it a cost-effective option. Nuclear power faces not only cost obstacles, but also implementation obstacles because of public concerns about nuclear plant safety and management of radioactive waste. The replacement of coal power plants with natural gas also faces implementation obstacles as utilities concerned about an uncertain natural gas supply resist investment in plants with a 30-year lifetime. Chapter 24 discusses each of the energy options in more depth.

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Page 488 image

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Page 489 FIGURE 29.1 Low-mid-high mitigation cost comparison, assuming 100 percent implementation.     Net Implementation Costa MaximumPotential Emission Reductionb Percent Reduction     ($/t CO2 equivalent) in U.S. Emissionsc     Low Mid High (Gt CO2 eq./yr.) CO2(%) CO2 eq. (%) 1 Residential & Commercial Energy Efficncyd -78 -62 -47 0.9 18 11 2 Vehicle Efficiency (no fleet change)d -75 -40 -2 0.3 6 4 3 Industrial Electric Efficiencyd -51 -25 1 0.5 11 7 4 Transportation System Managemente -50 -22 5 0.05 1 1 5 Power Plant Heat Rate Improvementsd -2 0 2 0.05 1 1 6 Landfill Gas Collectiond 0.4 1 1 0.2 5 3 7 Halocarbonse 0.9 1 3 1.4 29 18 8 Agriculturee 1 3 5 0.2 5 3 9 Reforestatione 3 7 10 0.2 5 3 10 Electricity Supplye 5 45 80 1.0 21 13 aMitigation options are placed in order of cost-effectiveness based on the average (arithmetic mean) of the costs for each option within that category at a social discount rate of 6 percent. If the cost provided (as shown in Tables 29.2 to 29.4) is a range, the cost range is averaged to determine the options cost. Only a select number of emission reduction methods are included. Those greater than $100/t CO2 eq. or whose cost is unknown are not included. bCumulative sector emission reductions are computed by adding the emission reduction from each mitigation option in that sector in gigatons per year. If the emission reduction is a range, the arithmetic mean is used to compute the cumulative emission reduction. To remove double-counting, the energy supply emission reduction potential was reduced by the amount of reduction potentially available for the less expensive efficiency options. For non-CO2 emission reductions, the equivalent impact of a CO2 reduction is computed by multiplying the non-CO2 reduction by the 100-yr GWP factors (see Chapter 19). cPercent reduction is in terms of 1988 U.S. CO2 emissions, which are assumed to be approximately 4.8 Gt CO2 per year. Total U.S. greenhouse gas emissions are, of course, larger than this and include emissions of halocarbons, methane, and nitrous oxide. They are assumed to be approximately 7.9 Gt CO2 eq./yr dCategory 1 options. eCategory 2 options.

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Page 490 from a source but acts as a sink. Thus this figure should be interpreted with extreme caution; however, the Mitigation Panel believes it provides a useful picture of the way in which many different mitigation options may be compared with one another. Implementing Response Programs Figures 29.2 to 29.5 place Figure 29.1 in the context of other cost estimates and the limitations associated with actually implementing a mitigation response program. To do this, the panel examined the sensitivity to the extent to which these programs are implemented by society. Figure 29.2 displays the Figure 29.1 supply curve for threed different levels of implementation of the emission reduction strategies: 25, 50, and 100 percent. As illustrated here, the effectiveness of CO2-equivalent emission reduction changes greatly as a function of the potential achieved. Figure 29.3 shows the range of technological costing cost estimates. The lower curve is the most optimistic estimate—100 percent implementation of the option as described in Table 29.1, with the lower-cost bound. The upper curve is a more pessimistic estimate—25 percent implementation of the option as described, with the upper-cost bound. Mitigation costs will not be known perfectly; an approach of the kind illustrated in Figure 29.3, which develops bounding cases, can be useful in developing mitigation plans. Figure 29.4 is a compilation of a number of energy modeling estimates of the cost of CO2-equivalent reduction. Details on the compilation of this curve are provided in Appendix R. The energy modeling estimates differ in two important characteristics from the technological costing analyses in this report. First, energy modeling estimates are comprehensive energy sector models. That is, they include a consistent accounting of the demand, supply, and resources used in the countries or regions studied. In this respect, they differ from the approach in this report, which looks at the possibilities for greenhouse gas reductions from individual technologies and attempts to make the estimates mutually consistent by manual calculations. One difficulty with the technological costing approach is that calculations are on a constant cost basis; that is, they do not account for how implementation of these measures may affect the cost of the measure. A major surge in the number of natural gas plants, for example, will likely increase demand for and therefore the price of natural gas. This would increase the cost of the mitigation option—perhaps changing its ranking. The same is true for energy efficiency measures: as demand is reduced, the price of electricity would change. This would change the savings available from that energy efficiency measure. The energy modeling approach takes these supply and demand impacts into account, while

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Page 491 image FIGURE 29.2 Mitigation comparison with different levels of implementation. image FIGURE 29.3 Range of technological costing mitigation cost estimates.

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Page 492 image FIGURE 29.4 Range of energy modeling mitigation cost estimates (see Appendix R for more information). image FIGURE 29.5 Comparison of technological costing and energy modeling methods of mitigation costs.

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Page 493 the technological costing approach is based on the margin of the current economy and therefore does not. A second important difference between the energy modeling approach and the approach taken by the Mitigation Panel is that the models surveyed estimate the cost function for reducing greenhouse gas emissions beginning from the point at which all "negative-cost" options have been employed. In most economic models, the market equilibrium is this point; in one model, where market failures are allowed, the results have been recast so that cost estimates begin from the point at which the market failures have been allowed for. It is important to note then, that the negative-cost part of the cost function, should that exist, is excluded from energy modeling analyses. A full description of the development of this curve is provided in Appendix R. Finally, Figure 29.5 combines the technological costing mitigation curves in Figure 29.3 and the energy modeling curves in Figure 29.4. The energy modeling curves fall roughly between the bounding estimates of the technological costing approach. The primary difference, as mentioned earlier, is that the energy modeling curves do not include the financial benefits from efficiency measures. At the current limited state of knowledge the panel believes that the actual implementation costs of mitigating greenhouse gas emissions (excluding costs beyond those needed directly for implementation) are likely to fall within the range provided by the technological costing method. It is important to note that while the panel believes that the technological costing approach is better suited to evaluating the comparative advantages and disadvantages of specific mitigation options because current economic models do not have the specificity needed for such an analysis, there are reasons to be skeptical of the degree to which such option-driven assessments can incorporate social responses (including market responses) to alternative courses of action. A review of Figures 29.2 to 29.5 indicates that it would not be unreasonable to expect that a roughly 25 percent reduction in U.S. greenhouse gas emissions (i.e., 2 Gt CO2 equivalent) might be achieved at a cost of less than $10/t CO2 equivalent. This is, in more commonly used terms, roughly an additional $22 per short ton of coal, $4.75 per barrel of oil, $0.60 per million cubic feet of natural gas, $0.11 per gallon of gasoline, or 0.7 cents/kWh for the current U.S. electricity mix. A wide array of policy instruments is available for implementing mitigation options. Two categories are direct regulation and incentives. Direct regulation instruments mandate action and include controls on consumption (bans, quotas, required product attributes), production (quotas on products or substances), factors in design or production (efficiency, durability, processes), and provision of services (mass transit, land use). Incentive instruments are designed to influence decisions by individuals and organizations,

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Page 494 and include taxes and subsidies on production factors (carbon tax, fuel tax), taxes on products and other outputs (emission taxes, product taxes), financial inducements (tax credits, subsidies), and transferrable emission rights (tradeable emission reductions, tradeable credits). The choice of policy instrument depends on the objective to be served. Interventions at all levels of human aggregation could effectively reduce greenhouse warming. For example, individuals could reduce energy consumption, recycle goods, and reduce consumption of deleterious materials. Local governments could control emissions from buildings, transport fleets, waste processing plants, and landfill dumps. State governments could restructure electric and gas utility pricing structures and stimulate a variety of efficiency incentives. National governments could pursue action in most of the policy areas of relevance. International organizations could coordinate programs in various parts of the world, manage transfers of resources and technologies, and facilitate exchange of monitoring and other relevant data. Although the analysis of mitigation options in this report does not include all possibilities, the Mitigation Panel is hopeful that it does identify the most promising options considered here. The panel feels confident that it provides the beginnings of a structure and a process for identifying those strategies that could appropriately mitigate the prospect of greenhouse warming. International Considerations Whatever policies the United States follows in order to truly address greenhouse warming, it will eventually be necessary to achieve broader international consensus in action. Many of the cost-effective options appropriate for the United States are also applicable in other countries, including developing nations. A range of other measures are also relevant, such as removing or reducing market-distorting subsidies that encourage greenhouse gas emissions. Effective participation of developing countries in the reduction of emissions will require political actions by those nations, as well as international negotiations that deal with the availability of financial and technical resources and with competing requirements for current economic growth. As discussed in Chapter 26, population growth, largely taking place in developing countries, is a basic contributor to the increase in greenhouse gas emissions. This will become even more relevant in the future, as those countries improve their economies with accompanying increased energy consumption. Limiting growth in population is central to limiting future energy consumption and, therefore, to future stabilization of greenhouse gas emissions. Limiting population growth may not be financially costly, but it is beset with political, social, and ideological obstacles. Similarly, as discussed in Chapter 27, reducing or reversing net deforestation as a means of

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Page 495 reducing greenhouse gases raises a host of nontechnical issues that are not evident from a financial standpoint. The international negotiations on greenhouse issues that will be required to lead to common action on these and related matters, and to avoid "free riders" (where one nation benefits from the costly actions of others), will be difficult and will necessarily involve matters of great political and economic concern. International studies and analyses are currently under way in an impressive number of settings, with the recent experience of the Montreal Protocol and Law-of-the-Sea negotiations as guides to approaches that are useful and those that should be avoided. Hard choices remain in the future, however, because negotiations will be more difficult than any of the predecessors in the environmental area. However, the necessarily deliberative nature of those negotiations should not obscure the conclusion that unilateral actions by the United States, or common actions by currently large greenhouse gas emitters among industrialized countries, can be useful on their own. They can reduce emissions below their expected levels in the short term, delay the onset of warming (if warming materializes), and create a precedent that could help lead to coordinated international action. Final Thoughts The Mitigation Panel has attempted to outline a perspective that should be pursued relative to mitigation policy. First, the United States needs to realize that although unilateral actions can contribute significantly to the reduction of greenhouse gases, the greenhouse warming phenomenon is global, and national efforts alone would not be sufficient to eliminate the problem. This means that the nation should take a global perspective with respect to possible actions. Second, cost-effectiveness should be a primary guide in making greenhouse warming mitigation policy as efficient as possible. Therefore the Mitigation Panel has tried to bring together informed judgments of the cost of greenhouse gas reduction, as well as other costs and benefits of prospective actions. It should be emphasized that the analysis the panel conducted was "cross-sectional" as opposed to a longitudinal analysis of options over time. There was no attempt, for example, to project future levels of economic activity and their implications for greenhouse gas emissions. This study does account, however, for future consequences of current actions. In particular, the direct effects of each option on greenhouse gas emissions are assessed. The panel has not attempted to examine those options under the different overall emission rates that might occur at future times. Its analysis must therefore be seen as an initial assessment of mitigation options in terms of their return on investment under current conditions. A subsequent analysis might consider appropriate strategies under changing

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Page 496 conditions. Furthermore, the time required to implement these mitigation options is not considered. Some options, such as those in energy efficiency, can be implemented immediately if the noneconomic obstacles are overcome. Others, such as changes in electricity production, might take considerably longer, on the order of decades. The rates at which these mitigation options are implemented depends on the decision makers in a wide range of firms, households, and governmental units throughout the United States. Once the cost-effectiveness and mitigation potential of each option were determined, the Mitigation Panel categorized these options. The best-practice (Category 1) options have significant potential for mitigating greenhouse warming at negative or low net implementation cost; however, information and incentive mechanisms are needed to hasten these reductions. Although no firm quantitative estimates of the net contribution of these policies can be given, it is not unreasonable to believe that U.S. greenhouse gas equivalent emissions could be reduced 25 percent from 1990 levels through use of these relatively low cost options alone. The second category of options (Category 2) entails additional costs and benefits not included in the cost-effectiveness estimate. The United States and other countries are already working to reduce CFC emissions—providing a major contribution to the reduction of greenhouse gas emissions at a relatively low cost (in addition to the benefits to the stratospheric ozone layer). Perhaps one of the surprises of this analysis is the relatively low cost at which some of geoengineering options (Category 3) might be implemented. However, it will require further inquiry to decide if geoengineering options can produce the targeted responses without unacceptable additional efforts. The level at which science is currently able to evaluate the cost-effectiveness of engineering the global mean radiation balance leaves great uncertainty in both the areas of technical feasibility and environmental consequences. This analysis does suggest that further inquiry is appropriate. Finally, greenhouse warming is an international problem that the United States cannot solve alone. Slowing worldwide population growth may be necessary to achieve a significant change in worldwide emissions of greenhouse gases. However, the panel's analysis indicates that reducing population growth alone may not reduce emissions of greenhouse gases if there is continued economic growth. Reduction of deforestation may provide another significant contribution to mitigating greenhouse gas emissions. Due to domestic concerns, however, candidate countries may find these options difficult to implement. The United States can make contributions to international efforts, and such action might significantly slow greenhouse warming at a cost that is less expensive than the cost of options implemented in the United States. The uncertainties in all of the mitigation alternatives underscore the central role of learning. This is not the usual academic call for more research. It is instead a recommendation that policy actions be treated as opportunities

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Page 497 to learn and that they be designed and executed so that learning is enhanced. This implies the need for more and better policy analysis. The world being altered by greenhouse warming is one whose geophysical and social character is imperfectly understood. Errors are inevitable. Large errors will be costly and painful. Accordingly, the United States must seek to use small errors as a source of learning, so as to lessen the possibility of serious mistakes. For example, the time dimension is an important part of formulating a greenhouse warming mitigation strategy. It can have important consequences for determining the optimal timing and quantity of any intervention. This is true if that decision is based on what society gets in the form of lesser global climate change vis-à-vis what it gives up in terms of current satisfaction and the enhanced ability to accommodate future adaptation. In this, fully accounting for all the positive aspects of mitigation—reduced speed of change, reduced total exposure to damage, and final level of global climate change—is important. Each has separate effects on the consequences of societal interest such as rise in sea level, agricultural productivity, and changes in ecological systems. They can also differ in their effects on the distribution of consequences over time and geography. Different instruments may lead to outcomes that diverge from those expected when only tons reduced and costs are considered. Application of the relationships discussed here requires an understanding of the physical relationships among flows, stock, and global climate change that lies beyond current knowledge. It also requires complex judgments about the trade-offs among sometimes competing policy goals. Political processes will, in the end, determine whether and when these particular mitigation options should be undertaken. The results of this analysis indicate that the United States could make an important contribution to slowing greenhouse warming through adoption of some of these mitigation options. Some options might even provide a net savings to the U.S. economy. Using this analysis and information from the other two panels, the Synthesis Panel judges the extent to which these options should be pursued. Note 1. Throughout this report, tons (t) are metric; 1 Mt = 1 megaton = 1 million tons; and 1 Gt = 1 gigaton = 1 billion tons. Reference Intergovernmental Panel on Climate Change. 1991. Climate Change: The IPCC Response Strategies. Covelo, Calif.: Island Press.

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