GBG Reducing greenhouse gas emissions whilst furthering poverty reduction and sustainable development goals: The co-benefits of Environmental Fiscal Reform measures for climate change mitigation in non-Annex 1 countries. Jacqueline Cottrell Project Manager, Green Budget Europe GCET 2010, Bangkok

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 2 Structure of this presentation 1.Climate change mitigation and poverty reduction 2.Mitigation potentials in the 2007 IPCC Fourth Assessment Report 3.The single most important barrier to mitigation – market distortions 4.The co-benefits of EFR – showing the way forward for overcoming barriers to climate change mitigation

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 3 Climate change and non Annex 1 countries  Rapidly industrialising economies are accounting for an increasing share in global GHG emissions  Growing global consumer class of 1.7 billion, 600 million in Asia-Pacific region  Increasing affluence leads to increasing consumption of energy- and resource-intensive products and thus higher GHG emissions  If current trends continue unabated, the IPCC has predicted that GHG emissions are predicted to increase by 25-90% on 2000 levels by 2030  It is in rapidly industrialising countries that the greatest potentials for emissions reductions can be found

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 4 The Global GHG Abatement Cost Curve (beyond BAU to 2030) Source: McKinsey 2009

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 5 Poverty reduction and climate change mitigation  short-term achievements in poverty reduction will be undermined if the impacts of climate change are not mitigated  while climate change mitigation is not a policy priority in many developing countries, it can be regarded as a co-benefit of measures that yield other direct and immediate benefits  cost savings through enhanced resource and energy efficiency  revenues raised as a result of EFR measures for poverty reduction, pro-poor investment, pollution control  increased energy security  improved access to (renewable or low-carbon) energies  reduced pollution (air, water, soils)  reduced levels of deforestation  improved natural resource management

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 6 Climate change and the Millennium Development Goals  Climate change could prevent or undermine attainment of MDGs  MDG 7 – ensure environmental sustainability, now includes indicator based on CO 2 emissions (total, per capita, per US$ GDP)  Access to energy supply is an enabling condition for: MDG 1, to halve the number of people living on <US$1 a day MDGs 4 & 5, to reduce child and maternal mortality MDG 6, to combat major diseases, increase access to clean H 2 O  Climate change mitigation requires deployment of low-carbon energy  Because achieving the MDGs is an absolute priority, GHG mitigation strategies may be easier to implement if they also contribute to this goal

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 7 Structure of this presentation 1.Climate change mitigation and poverty reduction 2.Mitigation potentials in the 2007 IPCC Fourth Assessment Report 3.The single most important barrier to mitigation – market distortions 4.The co-benefits of EFR – showing the way forward for overcoming barriers to climate change mitigation

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 8 The IPCC report – global sectoral emissions (2004) Source: IPCC 2007

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 9 The IPCC report – global mitigation potentials Source: IPCC 2007

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 10 Structure of this presentation 1.Climate change mitigation and poverty reduction 2.Mitigation potentials in the 2007 IPCC Fourth Assessment Report 3.The single most important barrier to mitigation – market distortions 4.The co-benefits of EFR – showing the way forward for overcoming barriers to climate change mitigation

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 11 Market distortions – the single most significant barrier to mitigation (1)  In relation to energy supply and use  Fossil fuel subsidies are creating upward trend in carbon intensity of energy mix in non-OECD countries  Global fossil fuel consumption subsidies were worth US$557 billion in 2008  Phase-out would reduce CO2 emissions by 7% (IEA 2010)  Cheap fossil energy encourages wasteful behaviour, supports upward trend in carbon intensity of energy mix in developing countries  Reform often faces strong opposition, but compensatory measures can protect the vulnerable

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 12 Market distortions – the single most significant barrier to mitigation (2)  In the forestry sector -  value of environmental services provided by forests are not reflected their price e.g. timber, watershed protection  In the waste sector –  low prices of resources do not encourage recycling or reuse  e.g. few market incentives for reduction of methane emissions from landfill  In agriculture –  many states support intensive agricultural practices by subsidising fertilisers or pesticides or product prices

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 13 So why is EFR not more widespread in developing countries?  Lack of capacity to identify where EFR measure could be applicable and to design EFR measures  Weak financial governance, leading to poor enforcement, so too few positive experiences to encourage new measures  Reluctance of governments to take the lead and risk the competitiveness of domestic industry  Political resistance within ministries, policy-makers, civil servants  Resistance from industry and other stakeholders  Generally felt mistrust of taxation measures  Even in OECD countries, where EFR has been tried and tested, scepticism can be high

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 14 Structure of this presentation 1.Climate change mitigation and poverty reduction 2.Mitigation potentials in the 2007 IPCC Fourth Assessment Report 3.The single most important barrier to mitigation – market distortions 4.The co-benefits of EFR – showing the way forward for overcoming barriers to climate change mitigation

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 15 The ANEEL energy efficiency programme, Brazil  Third-party subsidy paid by utilities for energy efficiency projects (worth up to US$200 million/yr)  Environmental education, light bulb and refrigerator substitution, improved electric showers, electric motors, HVAC, water heating, renewables  e.g. Coelba’s fridge and bulb replacement programme:  13,000 fridges replaced, 93,000 bulbs distributed  safe electricity connections set up in homes supplied  40% energy savings  reduced energy costs  reduced CO 2 emissions (7,000 t CO 2 –eq/yr over 10 years)  regenerates fridges CFC-12-filled cooling systems (high GWP)  revenues from recycling fridges fund income generation projects

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 16  The National Fund for Energy Conservation (FNME) gives customers 20% of the initial cost of solar water heaters  Part-funded by environmental taxes – a car registration duty and local production and import duties on thermal units in air conditioning systems  Additional cost subsidies, subsidised interest rates  Customers pay only 10% in cash for the initial cost  Monthly loan repayments are recovered in energy bills over a 5 year period  In 2007 alone, 60,000m 2 of solar panels were installed  Estimated GHG emissions reductions of 11,000 tCO 2 -eq/yr  Households have better, cleaner access to hot water  Air pollution reduced PROSOL, Tunisia – solar water heating for households

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 17 Differentiated electricity pricing in China  preferential grid price for desulphurized electricity  end-user price for desulphurized electricity was raised to spread cost between plants, grid and consumers  following introduction, SO2 emissions fell by 1.8 million tonnes/yr  environmental damage costs saved US$5 billion  improved air quality  power industry welcomed move as it could save on pollution levy payments (reduced by US$150 million)  desulphurization facilities worth well over US$ 1 billion

GBG 13/09/2015© Jacqueline CottrellGreen Budget Europe – Exhibit 18 THANK YOU FOR YOUR ATTENTION!  ANY QUESTIONS?  More information at: 