Tuesday, November 3, 2009

Too good to be true

During a side event this afternoon in Barcelona IIASA (International Institute for Applied Systems Analysis) analyzed mitigation potentials, pledges and costs of Annex I countries in the view of the crisis using economic projections of the World Energy Outlook 2009 (WEO, 2009) of the International Energy Agency. In particular, comparing these to the projections of WEO 2008 they emphasized:
- Lower energy use
- Lower GDP level
- Lower baseline Annex I GHG emissions (baseline GHG emissions projected in 2020 will be lower of 2005 emissions)
- Lower marginal abatement cost (in order to reduce GHG emission of 25% by 2020 the marginal abatement cost will be 50 euro/tCO2e)
- Lower total abatement costs (it will be possible to achieve 23% emissions reduction by 2020 comparing to 1990 for Annex I with no costs)
- Lower investments (the largest investment demand will occur in the domestic sector while investment in power sector will be lower in the mitigation scenario comparing to the baseline).
So, the highly criticized conclusion was: "emission caps that are developed for 2020 based on pre-crisis perspective might not induce any need of further mitigation measures in a post-crisis world".
After that, the second step was an update of the IIASA’s GAINS (Greenhouse Gas and Air Pollution Interactions and Synergies) model with the projections of the WEO 2009. In particular, two scenarios have been considered in analyzing Annex I parties pledges for the post-2012 climate treaty: a conservative and an optimistic.
As a whole, thanks to crisis with appropriate economic trading mechanisms the pledges would involve no net costs to Annex I countries. Even for the optimistic case, the analysis suggests that the implied measures would lead to cost savings compared to the baseline projection as reduced energy costs from energy savings would outweigh the costs for implementing the measures, indeed.
In addition, because of the large amount of “hot air” it is unlikely that a significant carbon market would emerge, especially in the conservative case while in the optimistic the carbon market will continue even if the price of carbon will be very low (less than 10 euro/tCO2e in 2020).
For more information see:
Notes: IIASA provides free access to an interactive GAINS GHG mitigation efforts calculator that allows online-comparison of mitigation efforts across Annex I Parties at http://gains.iiasa.ac.at/MEC

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