Climate Change and World Energy

This Interim Report first appeared as a chapter in \f2Climate Change - Socio-economic Dimensions of Mitigation Measures\f1 (Pekka Pirilae, Editor; publisher Oy EDITA AB, Helsinki, 2000). It is reprinted here, with permission, with minor revisions. Preceding chapters in the book discuss possible adverse consequences of climate change. This chapter starts by assuming that the possibility of such adverse consequences justifies action to limit climate change. Its purpose is then twofold. First, it summarizes the state of the art in modeling long-term greenhouse gas emissions from energy use, and extracts lessons for international (and national) efforts to limit emissions. Two such lessons are emphasized - the importance of technological progress to reduce the world's energy intensity, and the importance from shifting from fossil to non-fossil fuels as our primary energy sources. Given these basic objectives, this chapter next addresses "burden sharing"- the question of how the burden of limiting emissions ought to be shared among countries, particularly between rich and poor. The chapter does not advocate any particular burden sharing formula; indeed it argues that debates over formulas may generate more heat than light. Instead the chapter emphasizes efforts to implement and expand emission trading, particularly with developing countries, which are expected to have large opportunities for low-cost emission reductions. Not only will effective trading lead to efficient reductions, it could well represent large revenues for developing countries - revenues that the rich developed countries could well be more than happy to pay.