Working Group III: Mitigation

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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.

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