5 Barriers, Opportunities, and Market Potential of Technologies and Practices
The transfer of technologies and practices that have the potential to reduce
GHG emissions is often hampered by barriers12
that slow their penetration. The opportunity13
to mitigate GHG concentrations by removing or modifying barriers to or otherwise
accelerating the spread of technology may be viewed within a framework of different
potentials for GHG mitigation (Figure TS.7). Starting
at the bottom, one can imagine addressing barriers (often referred to as market
failures) that relate to markets, public policies, and other institutions that
inhibit the diffusion of technologies that are (or are projected to be) cost-effective
for users without reference to any GHG benefits they may generate. Amelioration
of this class of "market and institutional imperfections" would increase
GHG mitigation towards the level that is labelled as the "economic potential".
The economic potential represents the level of GHG mitigation that could be
achieved if all technologies that are cost-effective from the consumers'
point of view were implemented. Because economic potential is evaluated from
the consumer's point of view, we would evaluate cost-effectiveness using
market prices and the private rate of time discounting, and also take into account
consumers' preferences regarding the acceptability of the technologies'
Of course, elimination of all these market and institutional barriers would
not produce technology diffusion at the level of the "technical potential".
The remaining barriers, which define the gap between economic potential and
technical potential, are usefully placed in two groups separated by a socio-economic
potential. The first group consists of barriers derived from people's preferences
and other social and cultural barriers to the diffusion of new technology. That
is, even if market and institutional barriers are removed, some GHG-mitigating
technologies may not be widely used simply because people do not like them,
are too poor to afford them, or because existing social and cultural forces
operate against their acceptance. If, in addition to overcoming market and institutional
barriers, this second group of barriers could be overcome, what is labelled
as the "socio-economic potential" would be achieved. Thus, the socio-economic
potential represents the level of GHG mitigation that would be approached by
overcoming social and cultural obstacles to the use of technologies that are
Finally, even if all market, institutional, social, and cultural barriers were
removed, some technologies might not be widely used simply because they are
too expensive. Elimination of this requirement would therefore take us up to
the level of "technological potential", the maximum technologically
feasible extent of GHG mitigation through technology diffusion.
An issue arises as to how to treat the relative environmental costs of different
technologies within this framework. Because the purpose of the exercise is ultimately
to identify opportunities for global climate change policies, the technology
potentials are defined without regard to GHG impacts. Costs and benefits associated
with other environmental impacts would be part of the cost-effectiveness calculation
underlying economic potential only insofar as existing environmental regulations
or policies internalize these effects and thereby impose them on consumers.
Broader impacts might be ignored by consumers, and hence not enter into the
determination of economic potential, but they would be incorporated into a social
cost-effectiveness calculation. Thus, to the extent that other environmental
benefits make certain technologies socially cost-effective, even if they are
not cost-effective from a consumer's point of view, the GHG benefits of
diffusion of such technologies would be incorporated in the socio-economic potential.