7.4 Special Issues Relating to Developing Countries and EITs
A number of special issues related to technology use should be considered as
the critical determinants of climate change mitigation potential and related
costs for developing countries. These include current technological development
levels, technology transfer issues, capacity for innovation and diffusion, barriers
to efficient technology use, institutional structure, human capacity aspects,
and foreign exchange earnings.
Climate change studies in developing countries and EITs need to be strengthened
in terms of methodology, data, and policy frameworks. Although a complete standardization
of the methods is not possible, to achieve a meaningful comparison of results
it is essential to use consistent methodologies, perspectives, and policy scenarios
in different nations.
The following modifications to conventional approaches are suggested:
- Alternative development pathways should be analyzed with different patterns
of investment in infrastructure, irrigation, fuel mix, and land-use policies.
- Macroeconomic studies should consider market transformation processes in
the capital, labour, and power markets.
- Informal and traditional sector transactions should be included in national
macroeconomic statistics. The value of non-commercial energy consumption and
the unpaid work of household labour for non-commercial energy collection is
quite significant and needs to be considered explicitly in economic analysis.
- The costs of removing market barriers should be considered explicitly.
7.5 Modelling Approaches to Cost Assessment
The modelling of climate mitigation strategies is complex and a number of modelling
techniques have been applied including input-output models, macroeconomic models,
computable general equilibrium (CGE) models, and energy sector based models.
Hybrid models have also been developed to provide more detail on the structure
of the economy and the energy sector. The appropriate use of these models depends
on the subject of the evaluation and the availability of data.
As discussed in Section 6, the main categories of climate
change mitigation policies include: market-oriented policies, technology-oriented
policies, voluntary policies, and research and development policies. Climate
change mitigation policies can include all four of the above policy elements.
Most analytical approaches, however, only consider some of the four elements.
Economic models, for example, mainly assess market-oriented policies and in
some cases technology policies primarily those related to energy supply options,
while engineering approaches mainly focus on supply and demand side technology
policies. Both of these approaches are relatively weak in the representation
of research and development and voluntary agreement policies.