9.1 Introduction and Progress since the Second Assessment Report
In the Second Assessment Report (SAR) and in the literature, the benefits and
costs of mitigation have largely been measured in terms of macro concepts such
as gross domestic product (GDP) or total welfare; sectoral effects have not
been considered as a central issue. This chapter considers these sectoral implications.
For a definition of co-benefits and ancillary benefits and costs, see Chapter
7; for the macroeconomic effects of mitigation policies, see Chapter
The definitions of sectors adopted in this chapter is that of the UN System
of National Accounts (1993 ISIC). This is an internationally agreed set of definitions,
conventions, and accounts which includes the division of the macro economy into
industrial sectors, such as manufacturing. The data for sectoral economic models
are usually arranged according to these accounts, and the results of the models
reported below (in as much as they provide a comprehensive sectoral disaggregation
of the macroeconomic effects) will follow these definitions. However, the energy
sector is further subdivided in this chapter, since the mitigation effects are
so important and distinct for the component industries, namely coal, oil and
gas, and electricity.
When assessing the sectoral responses to mitigation policies and measures,
a distinction can be made between commercial firms (partnerships or corporations)
and persons (such as car drivers and home-owners) as decision makers. Firms
are generally expected to be more price-responsive in their fuel use, because
of better access to capital, information, and technologies, while persons generally
value lifestyles more highly in their fuel use decisions. Although sectors
are largely taken to be industrial contributors to GDP, households and private
motorists are also responsible for large amounts of greenhouse gas (GHG) emissions
and are also covered in this chapter.
The effects of mitigation can be divided into the effects in the sector or
region that undertake the mitigation policies and measures and the further,
consequential effects, or spillovers, on other sectors or regions. More investment
in energy-efficient equipment or in technology to develop a renewable source
of energy may lead to technological spillovers on other sectors. Such spillovers
are considered below.
This chapter continues with reviews of results from multisectoral studies (9.2.1),
followed by those on each major sector in turn (coal, petroleum and gas, non-fossil-based
energy, agriculture and forestry, manufacturing, construction, transport, service
industries, and households in Sections 9.2.2 to 9.2.10).
Section 9.3 reviews the literature on sectoral spillover
effects of mitigation in one country or region on the rest of the world. Ancillary
benefits associated with particular sectors or with sectoral mitigation policies
are covered in Sections 9.2.2 to 9.2.10.
Section 9.4 considers why the macro and sectoral studies
come to different conclusions. Section 9.5 suggests areas
for further research.