UNEP Collaborating Centre on Energy and Environment Sustainable Development and Climate Change Policies in Developing Countries Kirsten Halsnæs

UNEP Collaborating Centre on Energy and Environment

IPCC Conclusions CC is part of a larger challenge of SD. CC policies are more effective when embedded in broader development strategies. SD policies affect the potential and costs of CC policies SD can be used as a framework for understanding society’s ability to respond to CC impacts (adaptation and mitigation), but more work is needed to understand and assess the capacity for policy implementation.

UNEP Collaborating Centre on Energy and Environment Conceptual Basis of SD and CC Studies The capacity for policy implementation depends on: Manmade capital: Production technologies in manufacture, energy systems, land use sectors, transport. Natural capital: Energy sources, forestry, soil quality, ecological systems. Human capital: Educational level and professional skills. Social capital: Institutions, information sharing systems, government regulation, property rights, trust and enforcement. Most adaptation and mitigation studies have only addressed manmade and natural capitals

UNEP Collaborating Centre on Energy and Environment Difficulties in Assessing the “Capitals” Capitals are stocks of resources that constitute the basis for development and human response. Complexities when substitution between the capitals are constrained (strong sustainability) Intergenerational equity: Uncertainty, preferences of future generations. Social capital and institutional aspects embody intangible attributes, which only show up in relation to policy implementation. Unpredictable? Human and social capital have a public ”good character”. Investements in these capitals can go beyond the scope of climate change policies.

UNEP Collaborating Centre on Energy and Environment

StudyArea and sectors Scenarios, US$ 1996 Average ancillary benefit $ per t C Key pollutantsMajor endpoints Dessus and O’Connor, 1999 Santiago ChileTax of $67 Tax of $157 Tax of $ Seven air pollutants Health – morbidity and mortality, IQ Cifuentes et al., 2000 Santiago ChileEnergy efficiency 62SO2, NOx, CO, NMHC, PM10, dust. Health Gabaccio et al., 2000 China – 29 sectors Tax of $1 Tax of $2 52 PM10, SO2Health Wang and Smith, 1999 China – power and households Energi efficiency, fuel substitution PM, SO2Health Barker and Rosendahl, 2000 Western Europe, 19 regions Tax of $161153SO2, NOx, PM10 Human and animal health and welfare, materials, buildings and other physical capital, vegetation Burtraw et. al.,,1999 USATax of $10 Tax of $25 Tax of $ SO2, NOxHealth

UNEP Collaborating Centre on Energy and Environment

Sustainable Development Addressed as a Public Planning Problem Various SD definitions in the literature. Commonality is that they try to integrate development, environment and social dimensions in a short- and long time frame. Approach: Use experiences from literature on public planning and decision making. Define indicators that reflect major policy priorities. Use analytical approaches that can facilitate an evaluation of multiple objectives.

UNEP Collaborating Centre on Energy and Environment Potential Sustainable Development Indicators Economic GDP growth Sectoral development Employment Foreign exchange Investments Regional structure Human: Education Health Capabilities: Freedom, well being, living standards Environment Air pollution Water pollution Waste discharge Exhaustible resources Biodiversity Social Local participation and sharing of benefits Income distribution Information sharing systems Institutional capacity building

UNEP Collaborating Centre on Energy and Environment Examples of linkages between general policy priorities and indicators that can be integrated in technical assessments Policy priorities in general development programme Examples of arguments included in the technical assessment Economic development Macroindicators e.g. GDP growth. Social cost of the project. Employment Impacts on employment for different labour market segments. Rural development programmes Economic activity generated in rural area. Energy supply to rural area. Local air pollution improvement SO 2, NO x and particulate emissions. Acid depositions. Health impacts. Increasing activity in the manufacturing sector Investments in manufacture. Energy supply to manufacture. Poverty alleviation Change in numbers under various poverty lines.

UNEP Collaborating Centre on Energy and Environment

Objective/Welfare Functions

UNEP Collaborating Centre on Energy and Environment Matrix for Evaluating Biogas and Windturbine Case Examples

UNEP Collaborating Centre on Energy and Environment

Case Studies

UNEP Collaborating Centre on Energy and Environment Impacts Included in the Social Cost Assessment Employment: – Net income gain adjusted for unemployment benefits, informal employment, work related expenses. – Value of lost leisure time. – Value of health impacts of being unemployed. Health impacts: – Mortality: Value of statistical life, ppp adjusted. – Major injuries. Air pollution impacts: – Benefit transfer approach based on ExterneE data.

UNEP Collaborating Centre on Energy and Environment Cost Concepts

UNEP Collaborating Centre on Energy and Environment Botswana Cases ProjectBaselineSocial cost adjustment Road pavementPavements of sandy roads Sandy roads, 50% higher fuel consumption Reduced SO2,Nox and particulates Employment Efficient lightingIntroduction of compact fluorescent lamps, 11 watt. Incandescent lamps 60 watt. Coal fired power Reduced SO2,Nox and particulates Central PV2 MW capacity of PV additional to baseline capacity Coal fired powerReduced SO2,Nox and particulates Coal mining health impacts Industrial BoilersImproved coal fired boiler with 85% efficiency Existing coal boiler with 79 % efficiency Reduced SO2,Nox and particulates Power factor correction Installation of power factor correction. Coal fired power without p.f.c. Reduced SO2,Nox and particulates

UNEP Collaborating Centre on Energy and Environment

Botswana Conclusions Large national ancillary benefits of GHG emission reduction case projects. Fuel saving benefits are significant due to energy efficiency improvements. Local air pollution reduction benefits – low estimate compared with urban air pollution damages. Health benefits are in conflict with employment issues for the coal mining sector. Project ranking differ for the financial- and social cost perspective. Botswana can maximise local benefits of CC policies if project supply is based on development priorities.

UNEP Collaborating Centre on Energy and Environment Alternative Approaches and Objectives CBA: Decision criteria to maximise the total net economic impact of implementing the individual projects. C BA: Decision criteria to maximise the economic benefits relative to the gross financial project costs. CEA: Decision criteria to minimise financial project costs per unit of GHG emission reduction. CEA: Decision criteria to minimise social costs per unit of GHG emission reduction. MCA : Decision criteria to maximise the project score on indicators with equal weights to all impacts. MCA: Decision criteria to maximise the project score on indicators. Particular high weights to reduced SO 2 and NO x emissions.

UNEP Collaborating Centre on Energy and Environment

Conclusions Normative element in the selection of policy objectives. Project ranking change with different analytical approach and different policy objective weights. Major differences in approaches relate to the establishment of weights. In particular MCA are very sensitive to assumptions about weights – no rule exist. Policy evaluation depends on: – Chosen SD indicators – Measurement and valuation approach – Overall policy objectives.

UNEP Collaborating Centre on Energy and Environment Sustainable DevelopmentGHG Emission Reduction Projects Development, Local Environment, Social Impacts, GHG Emissions Joint International Policies Developing CountriesIndustrialised Countries