C. MITIGATION IN THE SHORT AND MEDIUM TERM (UNTIL 2030)
Box SPM-2. Mitigation potential and analytical
The concept of “mitigation potential” has been developed to
assess the scale of GHG reductions that could be made, relative
to emission baselines, for a given level of carbon price
(expressed in cost per unit of
carbon dioxide equivalent
emissions avoided or reduced). Mitigation potential is further
differentiated in terms of “market potential” and “economic
Market potential is the mitigation potential based on private
costs and private discount rates which might be expected to
occur under forecast market conditions, including policies and
measures currently in place, noting that barriers limit actual
Economic potential is the mitigation potential, which takes
into account social costs and benefits and social discount
rates, assuming that market efficiency is improved by policies
and measures and barriers are removed [2.4].
Studies of market potential can be used to inform policy
makers about mitigation potential with existing policies and
barriers, while studies of economic potentials show what might
be achieved if appropriate new and additional policies were put
into place to remove barriers and include social costs and
benefits. The economic potential is therefore generally greater
than the market potential.
Mitigation potential is estimated using different types of
approaches. There are two broad classes – “bottom-up” and
“top-down” approaches, which primarily have been used to assess
the economic potential.
Bottom-up studies are based on assessment of mitigation
options, emphasizing specific technologies and regulations. They
are typically sectoral studies taking the macro-economy as
unchanged. Sector estimates have been aggregated, as in the TAR,
to provide an estimate of global mitigation potential for this
Top-down studies assess the economy-wide potential of
mitigation options. They use globally consistent frameworks and
aggregated information about mitigation options and capture
macro- economic and market
Bottom-up and top-down models have become more similar since
the TAR as top-down models have incorporated more technological
mitigation options and bottom-up models have incorporated more
macroeconomic and market
feedbacks as well as
adopting barrier analysis into their model structures.
However, current bottom-up and top-down studies of economic
potential have limitations in considering life-style choices,
and in including all externalities such as local air pollution.
They have limited representation of some regions, countries,
sectors, gases, and barriers. The projected mitigation costs do
not take into account potential benefits of avoided
Box SPM-3. Assumptions in studies on mitigation
portfolios and macro-economic costs.
Studies on mitigation portfolios and macro-economic costs
assessed in this report are based on top-down modelling. Most
models use a global least cost approach to mitigation portfolios
and with universal emissions trading, assuming transparent
markets, no transaction cost, and thus perfect implementation of
mitigation measures throughout the 21st century.
Costs are given for a specific point in time.
Global modelled costs will increase if some regions, sectors
(e.g. land-use), options or gases are excluded. Global modelled
costs will decrease with lower baselines, use of revenues from
carbon taxes and auctioned permits, and if induced technological
learning is included. These models do not consider climate
benefits and generally also co-benefits of mitigation measures,
or equity issues.
5. Both bottom-up and top-down studies indicate that there is substantial economic potential for the mitigation of global GHG emissions over the coming decades, that could offset the projected growth of global emissions or reduce emissions below current levels (high agreement, much evidence).
Uncertainties in the estimates are shown as ranges in the
tables below to reflect the ranges of baselines, rates of
technological change and other factors that are specific to the
different approaches. Furthermore, uncertainties also arise from
the limited information for global coverage of countries,
sectors and gases.
- In 2030, the economic potential estimated for this
assessment from bottom-up approaches (see
is presented in
For reference: emissions in 2000 were equal to 43
- Studies suggest that mitigation opportunities with net
negative costs have the potential to reduce emissions by
around 6 GtCO2-eq/yr in 2030. Realizing these
requires dealing with implementation barriers [11.3].
- No one sector or technology can address the entire
mitigation challenge. All assessed sectors contribute to the
The technologies with the largest economic potential for the
respective sectors are shown in
[4.3, 4.4, 5.4, 6.5, 7.5, 8.4, 9.4, 10.4].
Table SPM-1. Global economic mitigation
potential in 2030 estimated from bottom-up studies.
Top-down studies calculate an emission reduction for 2030 as
The global economic potentials found in the top-down studies are
in line with bottom-up studies (see
though there are considerable differences at the sectoral level
The estimates in Table SPM-2 were derived from stabilization
scenarios, i.e., runs
towards long-run stabilization of
Table SPM-2: Global economic mitigation
potential in 2030 estimated from top-down studies.
Table SPM-3. Key mitigation technologies and practices by
6. In 2030 macro-economic costs for multi-gas mitigation, consistent with emissions trajectories towards stabilization between 445 and 710 ppm CO2-eq, are estimated at between a 3% decrease of global GDP and a small increase, compared to the baseline (see Table SPM-4). However, regional costs may differ significantly from global averages (high agreement, medium evidence) (see Box SPM-3 for the methodologies and assumptions of these results).
Table SPM-4: Estimated global macro-economic
costs in 2030 for least-cost trajectories towards different
long-term stabilization levels.
- The majority of studies conclude that reduction of
GDP relative to the GDP
baseline increases with the stringency of the stabilization
- Depending on the existing tax system and spending of
the revenues, modelling studies indicate that costs may be
substantially lower under the assumption that revenues from
carbon taxes or auctioned permits under an emission trading
system are used to promote low-carbon technologies or reform
of existing taxes [11.4].
- Studies that assume the possibility that
climate change policy
induces enhanced technological change also give lower costs.
However, this may require higher upfront investment in order
to achieve costs reductions thereafter [3.3, 3.4, 11.4,11.5,
- Although most models show
GDP losses, some show
GDP gains because they assume that baselines are non-optimal
and mitigation policies improve market efficiencies, or they
assume that more technological change may be induced by
mitigation policies. Examples of market inefficiencies
include unemployed resources, distortionary taxes and/or
subsidies [3.3, 11.4].
- A multi-gas approach and inclusion of
carbon sinks generally
reduces costs substantially compared to
emission abatement only. [3.3]
- Regional costs are largely dependent on the assumed
stabilization level and baseline scenario. The allocation
regime is also important, but for most countries to a lesser
extent than the stabilization level [11.4, 13.3].