The threat of climate change proposes difficult problems for regulators and decision-makers in terms of uncertainties, varying exposures to risks and different attitudes towards risk among nations. Impact and cost assessments aim to alleviate some of these difficulties by attempting to treat the costs of inaction, regulation and adaptation. For such assessments to be relevant, they must deal with regions individually to estimate costs associated with different regulations since across regions the impacts from climate change and climate change regulation are heterogeneous. Canada, and her oil sands industry, is the focus of this CO2 mitigation cost and climate change impacts study. Two Canadian policies, in line with the stated goals of the two largest Canadian political parties, have been modeled using MIT’s Emission Prediction and Policy Analysis tool to better understand the costs of the policies and the emission reductions that they will achieve. Welfare losses reaching 3.3% (in 2050) for the goals outlined in the Canadian government’s “Climate Action Plan” and 8.3% (in 2050) for the goal to meet Kyoto and post-Kyoto targets put forward by the opposition are predicted by the model. Oil sands upgrading/refining experiences severe carbon leakage while Oil Sands production is more resilient and may present less regulatory risk for investment. Gasification to produce natural gas substitutes could potentially be undermined by strict CO2 policy unless optimistic carbon capture technology emerges. The results are highly dependent on whether an international carbon trading regime exists and whether bio-fuels emerge as a large scale, affordable, alternative to fossil fuels. The results are also dependent, to a lesser extent, on international CO2 policy.

The biofuels sector is in the midst of turmoil, and many people are asking whether biofuels will be able to deliver on their climate change, energy security and rural development objectives.

Whether biofuels will emerge from the current deadlock will depend on the policies and strategies that countries adopt, says The Biofuels Market: Current Situation and Alternative Scenarios.

The new UNCTAD report discusses "alternative decision paths" governments may consider in relation to biofuels and provides insights on the global repercussions those different choices may imply. The scenarios are linked to the following specific issues:

* The role of government targets for biofuel use.
* Links between biofuels and the greenhouse gas markets.
* Prospects offered by the unfolding of new biofuel technologies and the related intellectual property rights issues.
* Trade potential available to developing countries.
* Possible changes that could occur in current production and trade patterns, should alternative biofuel feedstocks become commercially available.

The report represents a new contribution by UNCTAD to the analysis of this dynamic and complex sector of the world economy.

This activity was made possible by the generous financial contribution of the Ministry of Environment, Land and Sea of Italy. UNCTAD has been working on the trade and development implications of biofuels since 2005, through its Biofuels Initiative.

© 2009 United Nations

This paper studies the cost effectiveness of combining traditional environmental policy, such as CO2 trading schemes, and technology policy that has aims of reducing the cost and speeding the adoption of CO2 abatement technology. For this purpose, we develop a dynamic general equilibrium model that captures empirical links between CO2 emissions associated with energy use, directed technical change and the economy. We specify CO2 capture and storage (CCS) as a discrete CO2 abatement technology. We find that combining CO2-trading schemes with an adoption subsidy is the most effective instrument to induce adoption of the CCS technology. Such a subsidy directly improves the competitiveness of the CCS technology by compensating for its markup over the cost of conventional electricity. Yet, introducing R&D subsidies throughout the entire economy leads to faster adoption of the CCS technology as well and in addition can be cost effective in achieving the abatement target.

© 2008 Elsevier B.V.

An explicit representation of the household transportation is important for the quantitative analysis of energy and environmental policy. Household transportation is among the more rapidly growing energy uses, transportation fuels are often taxed at much higher rates, policies directed toward energy use and environmental control generally treat the transportation and automobile energy efficiency differently than other uses, and substitution toward or away from automobile use in response to price and policy changes at the first level is likely to be toward purchased transportation. Aggregation of automobile fuel use with other fuels makes it impossible to study these factors explicitly.

The GTAP version 5 dataset has three transportation sectors. However, household transportation expenditures related to private automobiles are not represented explicitly in the data. We augment the existing GTAP data to separately disaggregate household transportation and explore the implications of this in the MIT Emissions Predictions and Policy Analysis (EPPA) model.

In order to model the household transportation sector, we derive a household expenditure share of own-supplied transport and a refined oil expenditure share for transport of the total household expenditure on refined oil in different regions. For this work we use OECD, Eurostat, UN, IEA, and USDOE data. Based on the resulting data, we modify the household transportation sector in the EPPA model, which consists of purchased and own-supplied transport. The corresponding adjustments to the household demand structure are also made.

By introducing this change and specifying elasticities of substitution for energy and between own- and purchased transportation that are representative of evidence in the literature we expect that differences, if they occur from the model without transport disaggregated, will show up in policy cases that increase fuel prices. Climate policy designed to limit carbon emissions effects the fuel cost. Thus, we calculate a change in welfare for a carbon policy scenario with and without household transportation sector. The disaggregation allows us to make better use of the extensive work in the transportation sector to understand substitution possibilities.