IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

Interaction of mitigation options with vulnerability and adaptation

Linkages between adaptation and mitigation in the industrial sector are limited. Many mitigation options (e.g., energy efficiency, heat and power recovery, recycling) are not vulnerable to climate change and therefore create no adaptation link. Others, such as fuels or feedstock switching (e.g. to biomass or other renewable energy sources) may be vulnerable to climate change [7.8].

Effectiveness of and experience with climate policies, potentials, barriers and opportunities/ implementation issues

Full use of available mitigation options is not being made in either industrialized or developing nations. In many areas of the world, GHG mitigation is not demanded by either the market or government regulation. In these areas, companies will invest in GHG mitigation to the extent that other factors provide a return for their investments. This return can be economic; for example, energy-efficiency projects that provide an economic pay-out, or can be in terms of achieving larger corporate goals, for example, a commitment to sustainable development. The economic potential as outlined above will only be realized if policies and regulations are in place. Relevant in this respect is that, as noted above, most energy-intensive industries are located in developing countries. Slow rate of capital stock turnover is also a barrier in many industries, as is the lack of the financial and technical resources needed to implement mitigation options, and limitations in the ability of industrial firms, particularly small and medium-sized enterprises, to access and absorb information about available options (high agreement, much evidence) [7.9.1].

Voluntary agreements between industry and government to reduce energy use and GHG emissions have been used since the early 1990s. Well-designed agreements, which set realistic targets and have sufficient government support, often as part of a larger environmental policy package, and a real threat of increased government regulation or energy/GHG taxes if targets are not achieved, can provide more than business-as-usual energy savings or emission reductions. Some have accelerated the application of best available technology and led to reductions in emissions compared with the baseline, particularly in countries with traditions of close cooperation between government and industry. However, the majority of voluntary agreements have not achieved significant emission reductions beyond business-as-usual. Corporations, sub-national governments, non-government organizations (NGOs) and civil groups are adopting a wide variety of voluntary actions, independent of government authorities, which may limit GHG emissions, stimulate innovative policies, and encourage the deployment of new technologies. By themselves, however, they generally have limited impact.

Policies that reduce the barriers to adoption of cost-effective, low-GHG emission technologies (e.g., lack of information, absence of standards and unavailability of affordable financing for first purchases of modern technology) can be effective. Many countries, both developed and developing, have financial schemes available to promote energy saving in industry. According to a World Energy Council survey, 28 countries provide some sort of grant or subsidy for industrial energy-efficiency projects. Fiscal measures are also frequently used to stimulate energy savings in industry. However, a drawback to financial incentives is that they are often also used by investors who would have made the investment without the incentive. Possible solutions to improve cost-effectiveness are to restrict schemes to specific target groups and/or techniques (selected lists of equipment, only innovative technologies), or use a direct criterion of cost-effectiveness [7.9.3].

Several national, regional or sectoral CO2 emissions trading systems either exist or are being developed. The further refinement of these trading systems could be informed by evidence that suggests that in some important aspects, participants from industrial sectors face a significantly different situation to those from the electricity sector. For instance, responses to carbon emission price in industry tend to be slower because of the more limited technology portfolio and absence of short-term fuel-switching possibilities, making predictable allocation mechanisms and stable price signals a more important issue for industry [7.9.4].

As noted in the TAR, industrial enterprises of all sizes are vulnerable to changes in government policy and consumer preferences. That is why a stable policy regime is so important for industry (high agreement, much evidence) [7.9].