Climate Change and the Economics of Targeted Mitigation in Sectorswith Long-Lived Capital Stock

Shalizi, Zmarak ; Lecocq, Franck

关键词: ABATEMENT;    AGGLOMERATION ECONOMIES;    AIR;    AIR TRAFFIC;    ALTERNATIVE ENERGY;   

DOI  :  10.1596/1813-9450-5063
RP-ID  :  WPS5063

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Mitigation investments in long-livedcapital stock (LLKS) differ from other types of mitigationinvestments in that, once established, LLKS can lock-in astream of emissions for extended periods of time. Moreover,historical examples from industrial countries suggest thatinvestments in LLKS projects or networks tend to be lumpy,and tend to generate significant indirect and inducedemissions besides direct emissions. Looking forward,urbanization and rapid economic growth suggest that similardecisions about LLKS are being or will soon be made in manydeveloping countries. In their current form, carbon marketsdo not provide correct incentives for mitigation investmentsin LLKS because the constraint on carbon extends only to2012, and does not extend to many developing countries.Targeted mitigation programs in regions and sectors in whichLLKS is being built at rapid rate are thus necessary toavoid getting locked into highly carbon-intensive LLKS. Evenif the carbon markets were extended (geographically,sectorally, and over time), public intervention would stillbe required, for three main reasons. First, to ensure thatindirect and induced emissions associated with LLKS aretaken into account in investor s financial cost-benefitanalysis. Second, to facilitate project or network financingto bridge the gap between carbon revenues that accrue overtime as the project/network unfolds and the capital neededupfront to finance lumpy investments. Third, to internalizeother non-carbon externalities (e.g., local pollution)and/or to lift barriers (e.g., lack of capacity to handlenew technologies) that penalize the low-carbon alternativesrelative to the high-carbon ones.