United Nations


Economic and Social Council

6 February 1996

Second session
New York, 12 - 23 February 1996
Item 4 (d)  of the provisional agenda
     *   E/C.13/1996/1.
                  Energy and protection of the atmosphere
                      Report of the Secretary-General
       The earth's atmosphere is affected by many interrelated anthropogenic
source of  interference that can lead to environmental impacts and ultimately
to irreversible changes to  climate system.  Such interference include local
and regional pollution (air, water and land) as  increasing concentrations of
greenhouse gases, aerosols and halocarbons.
       The extraction, conversion and combustion of fossil and, to a lesser
degree, land use  changes and agriculture lead to increasing concentration of
greenhouse gases that  are altering the radiation balance of the atmosphere,
which could possibly lead to climate change.   Concentrations of greenhouse
gases have increased significantly since the beginning of the fossil  fuel
era.  The depletion of the stratospheric ozone layer is largely caused by
emissions of  cholofluorocarbons and halons.  Protection of the atmosphere is
one of the important pre-conditions for ensuring sustainable economic
development.  Energy needs are given by three  principal factors; namely
population growth, economic and industrial development and technological
change.  Current per capita commercial energy consumption varies by more than
a factor of 20 between developed and developing countries.  The latter also
rely primarily on coal  and other solid fuel while most developed countries
rely on crude oil and natural gas.
       The type and extent of environmental impacts of energy production and
use are closely related to the degree of economic development and
industrialization.  Three classes of environmental problems have been
suggested.  These include problems associated with poverty, industrialization
and affluence.  Each class of problem places different burden of the
       Global primary energy use has increased by a factor of 20 since the
middle of the last century.  There is, however, considerable variation in
energy consumption growth rates over time between different world regions. 
Much of the increase in global primary energy consumption has occured in the
developed countries.  An important effect of economic development and
technological changes is their impact on energy intensities which tend to
decrease with increase levels of economic activities and technological
improvements.  The causes of energy intensity decrease are, however, many and
       Developed countries account for most of the carbon dioxide, as well as
aerosol and chlorofluorocarbon emissions.  At the present time, it is not
possible to reliably determine the combined effect of the concentration of
greenhouse gases, as well as other effects of human activities on the climate
system.  Because of the difficulty in establishing the magnitude and
geographical distribution of climate change, it is very difficult to determine
what is considered as dangerous levels of human interference with climate
system.  However, a range of options are available to mitigate against
undesirable impact of the atmosphere.  These include efficiency improvements,
fuel switching, structural changes, control of large point sources,
enhancement of greenhouse gas synch and adaptation to climate change. 
    The Committee on New and Renewable  Sources of Energy and on Energy for
Development at its first session ( 7-18 February 1994) requested the
Secretary-General to prepare a report on Energy and protection of the
atmosphere for consideration by the Committee at its second session.1  This
report has been prepared in response to the Committee's request.  It is based
almost exclusively on a study commissioned by the Secretariat.2
    The Earth's atmosphere is affected by many interrelated anthropogenic
sources of interference that can lead to environmental impacts and ultimately
to irreversible changes of the climate system.  Human interferences include
local and regional air pollution, and increasing concentrations of greenhouse
gases, aerosols, and halocarbons.  Combustion of fossil fuels and
unsustainable uses of biomass fuels cause extensive local and regional air
pollution often resulting in acidification that damages entire ecosystems. 
The extraction, conversion and combustion of fossil fuels, and to a lesser
degree land-use changes and agriculture, lead to increasing concentrations of
greenhouse gases that are altering the radiative balance of the atmosphere,
possibly causing climate change.  Human activities have increased the
atmospheric concentrations of many naturally occurring gases and have also
added new ones.Anthropogenic sources of chlorofluorocarbons are adding to the
greenhouse effect and are gradually destroying the ozone layer.  Taken
together, these human activities are projected to change regional and global
climate thereby.  These changes will affect large populations and especially
those communities that are more vulnerable, particularly the poor that have
lower abilities and resources to adapt to changing climatic conditions.  
    Protection of the atmosphere is one of the important preconditions for
ensuring that economic development can proceed in a sustainable manner.  This
report addresses issues related to the protection of the atmosphere from
energy-related sources of human interference.  It analyzes the relationship
between energy and development, prevailing trends in energy use throughout the
world and possible future developments, possible impacts on the atmosphere,
and strategies for mitigating and avoiding adverse impacts of possible climate
change. The report concludes with an assessment of the available policy
measures for the protection of the atmosphere within the context of
sustainable human development.  
1.  Local and Transboundary Air Pollution
    Local and transboundary pollutants from energy-related activities
deteriorate air quality in many urban and some rural regions throughout the
world.  They also result in economic and health damages and endanger
ecosystems.  High levels of indoor air pollution from burning low quality
biomass or coal in traditional open fireplaces are widespread in developing
countries.   Sulfur dioxide and nitrogen oxides emissions from fossil power
plants and dense motorized traffic cause regional and transboundary air
pollution that leads to acidification of forests, lakes and soils.  The
so-called ``acid rain'' has been a particular problem in Europe and North
America.  More recently, transboundary air pollution and increasing
acidification have also become sources of concern in the rapidly-developing,
coal-intensive economies of East Asia.
2.  Increasing Concentrations of Greenhouse Gases
    Concentrations of greenhouse gases have increased significantly since the
beginning of the fossil-fuel era two centuries ago.  Atmospheric
concentrations of carbon dioxide have increased by 30 per cent, those of
methane by 150 per cent and those of nitrous oxides by over ten per cent. 
Scientific evidence is strong that most of these increases are due to human
activities such as the burning of fossil fuels, land-use changes, and
agriculture.   Increasing concentrations of greenhouse gases tend to warm the
atmosphere, whereas aerosols such as sulfur dioxide tend to cool it in some
    These increases in the atmospheric greenhouse gases and aerosols, taken
together, are expected to lead to higher mean global temperatures and are
projected to change regional and global climate including  inter alia
precipitation, soil moisture, air and ocean currents, and sea levels.  Climate
change, in turn, could lead to adverse environmental impacts affecting human
activities and endangering sustainable development.The exact nature of these
impacts including their extent, variability and regional patterns are subject
to considerable scientific uncertainty.  
    The depletion of the stratospheric ozone layer is largely caused by
emissions of chlorofluorocarbons and halons. This results in increased
ultraviolet radiation reaching the Earth's surface that can impact human
health, including increased cases of skin cancer and eye disease. The
chlorofluorocarbons also produce a greenhouse effect; however this offset
somewhat by decreases in ozone which is also a greenhouse gas. A reduction of
the ozone depleting substances is regulated by the Montreal Protocol, but some
of the replacements for ozone depleting substances are, in turn, potent
greenhouse gases.  
3.  Energy for Development and Climate Change
    Energy production and use is the main source of many of the threats to
the Earth's atmosphere.  Despite tremendous increases in commercial energy use
to date, the majority of the global population still has inadequate access to
the kind of energy services enjoyed by the inhabitants of the industrialized
countries.  A lack of adequate energy services is one of  the  symptoms of
poverty.  The inequalities are so large that it would be virtually impossible
for the majority of the world's population to enjoy similar resource intensive
energy-use patterns as those prevailing in the industrialized countries.  More
sustainable energy patterns throughout the world and the protection of the
atmosphere are recognized as important policy objectives at both the national
and international levels.  International environmental agreements are being
extended from the local and national to international levels.  
    Adequate protection of the Earth's atmosphere to prevent ``dangerous''
interference involves a number of formidable challenges.  Considerable energy
increases are required to satisfy basic human needs and to further social and
economic development.  However, the current, largely inadequate, use of energy
in many instances already produces emissions that exceed tolerable levels in
urban regions and that exceed the critical loads for many ecosystems in rural
regions.  Remedies are needed urgently, but the current dependence on fossil
fuels for the provision of energy services will persist for many decades to
come. Again, the adverse impacts of energy use are going to increase without
appropriate and timely countermeasures.  Restructuring towards more
sustainable energy-use patterns would require large research and development
(R\&D) efforts and determined policy measures.  It is very capital intensive,
requiring new forms of financing and many decades of capital turnover.
    Protection of the atmosphere at the local, regional, and global levels
faces a number of competing social and economic policy concerns.  Some of them
have higher priorities such as the eradication of poverty, provision of
adequate health care and employment opportunities.  The challenge of
protecting the atmosphere is further compounded by persistent scientific
uncertainties concerning the exact nature of the interaction between human
activities and the atmosphere and about the possible impacts of climate
change, including the costs and benefits of adaptation and mitigation.
    Energy needs are driven by three principal factors: population growth,
economic and industrial development, and technological change.  Energy can be
seen as one of the fundamental  requirements for economic growth and social
improvements, and not just a consequence of  such growth.
1.  The Role of Energy in Economic Development
    To provide the required energy services, in the form of heat, light and
work, prior to the Industrial Revolution, the energy system relied on
harnessing natural energy flows, and animate and human power. Power densities
and availability were constrained by site-specific factors. Mechanical energy
sources were limited to draft animals, water and windmills. Burning of
fuelwood and tallow candles were the only means of converting chemical energy
to heat and light.Energy consumption typically did not exceed 0.5 toe (tons of
oil equivalent) per capita per year.3  Today, some two billion people still
rely on similar traditional energy end-use patterns.  They use traditional
energy forms and technologies and have no or inadequate access to modern
energy services. This severely constrains the satisfaction of basic needs: it
precludes the modernization of economic structures and hinders human
    Figure 1 shows the 1990 per capita energy consumption in a number of
world regions by source and contrasts this with their respective populations.
The height of the bars in Figure 2.1 is proportional to current per capita
energy use, the width of the bars is proportional to population size.  Hence,
the area of each bar is proportional to total energy use. The differences in
the per capita primary energy consumption in the world are indeed very large. 
Less than a third of the world's population consume more than two-thirds of
the global energy.  Cumulative historical consumption is even more unevenly
distributed: about 85 per cent of all energy used to date has been consumed by
less than 20 per cent of all the people who have lived since 1860.  
    Current per capita commercial energy consumption varies by more than a
factor of 20 between North America and South Asia.  These disparities are even
higher in the use of modern, commercial energy forms.  Commercial energy use
per capita can differ by as much as 500 times between individual countries in
the most extreme cases.  Western Europe and Japan have much lower per capita
energy consumption compared to North America with about the same levels of
affluence, indicating a substantial degree of diversity in energy consumption
patterns even among the developed countries. Disparities are also large among
developing countries, and they are even larger across different social and
economic groups everywhere.
    Another important difference is in the structure of energy supply.
Developing countries rely primarily on coal and other solid fuels such as
traditional and noncommercial sources of energy.5 Most of the developed
countries draw on large shares of crude oil and natural gas in their primary
energy consumption; some regions have substantial contributions of nuclear
energy and modern renewable sources.
    There is a visible and statistically significant relationship between per
capita energy consumption and per capita economic output, measured in terms of
Gross Domestic Product (GDP) both at prevailing market exchange rates (mer)
and at purchasing power parities (ppp),  across individual countries and
regions and over time.
    At one extreme are the low-income countries with lowest per capita energy
use.  They include Subsaharan Africa and South Asia. As incomes rise so does
energy use. At intermediate levels of per capita economic output and energy
use are the economies of North Africa and the Middle East, Pacific Asia and
Latin America. Current per capita primary energy use in some of the higher
income economies of Asia already exceeds that of some developed countries.
Although this pattern of growing energy use with economic development is
pervasive, there is no unique and universal ``law'' that specifies an exact
relationship between economic growth and energy use.
2.  Environmental Impacts of Energy
    The type and extent of the environmental impacts of energy production and
use are closely related to the degree of economic development and
industrialization.  Three different classes of environmental problems are
distinguished in the figure following a World Bank classification.  They
include environmental problems of poverty, industrialization, and  affluence.
Different phases of economic development place different burdens on the
environment.  But economic development also enables societies to resolve
environmental challenges.  Different types of environmental problems call for
different policy approaches and solutions.
    Environmental problems that result from poverty include inadequate
sanitation, lack of clean drinking water, high levels of indoor and outdoor
particulate matter air pollution.   Impacts are usually limited to those areas
close to the source of pollution. Adverse impacts often include poor human
health, sometimes also resulting in high mortality especially when it occurs
in combination with poverty. The most effective policy response to these types
of environmental problems is economic development itself.
    Environmental problems related to the process of  industrialization
includes high ambient concentrations of sulfur dioxide and high levels of
hazardous industrial wastes.  Problems emerge primarily in urban and
industrial areas, but with increasing levels of industrialization they also
spread to larger regions and start affecting many ecosystems in addition to
human health.  These environmental impacts can range in duration from days,
such as urban smog, to much longer time spans in cases of regional-scale
pollution like acid rain, toxification of river basins, or deforestation of
whole regions.  The environmental problems associated with industrialization
tend to first intensify and increase in magnitude and extent reach a peak and
thereafter decline.  The corresponding increase is due to the expansion of
production and urbanization. The decline is related to economic development.
The policy measures required to resolve the environmental problems of
industrialization need to combine incentives for a cleaner environment with
regulatory mechanisms.  Incentives should further structural change toward
more efficient use of energy and other resources including better energy
end-use devices, cleaner fuels and improved public infrastructures, among
others.  Regulatory mechanisms should inter alia include environmental
standards, financial and tax incentives, control of large emissions point
sources, and regular equipment maintenance and replacement.
    Typical examples of environmental problems associated with affluence
include ever increasing volumes of municipal wastes and energy-related
emissions of greenhouse gases, most notably carbon dioxide (CO2). 
Environmental impacts are mostly of an indirect long-term nature.  Their
extent and exact nature are often uncertain.  Examples include climate change
and loss of biodiversity. Spatial scales extend from the regional to the
global level.In contrast to the first two categories, the environmental
problems of {\it affluence} tend to become exacerbated with rising levels of
income and consumption. Hence, policy strategies need to be comprehensive and
cover numerous economic activities; they need to promote long-term structural
changes for production and consumption alike.  There are generally no easy,
quick ``technological fixes''.
    Two important generic strategies to address environmental issues at high
levels of income and consumption include improved energy efficiency and
``decarbonization'' of energy, that is, changes towards cleaner fuel supply
and end-use structures. Improved efficiency generally reduces resource use and
environmental impacts across all pollutants and across all spatial and
temporal scales.  ``Decarbonization'' also entails elements of multipurpose
strategies as it can simultaneously reduce global, regional and local
energy-related pollution.In addition to efficiency improvements and cleaner
energy, so-called ``end-of-the-pipe'' pollution abatement systems have been
successfully applied to large point sources and more recently to some mobile
sources. These include sulfur and nitrogen scrubbers for power plants and
catalytic converters for motor vehicles.  While the systems can be effected
relatively quickly, they have a more limited effect in reducing emissions.
They tend to reduce one pollutant in one particular location, rather than have
the broader impact of a switch to cleaner fuels or to inherently emission-free
energy systems.
3.  Energy and Sustainable Development
    The necessary preconditions for sustainable development are: (i)
avoidance of catastrophic events threatening the life support functions of the
Earth, including irreversible changes, and (ii) provision of the means and
capabilities for present and future generations to satisfy their basic needs
and giving them the possibilities to make choices about their lives beyond
basic needs, including the capacity to adapt to changing social, economic and
environmental conditions. This means the transference of increased knowledge
and knowhow, technology and capital from the present to future generations.
These transfers are compensation for the use of resources by current and past
generations.  For sustainable energy development this implies making
sufficient energy services available to every citizen of the planet now and in
the future so that basic human needs can be satisfied.  However, because the
current energy system predominantly relies on fossil fuel use this involves
consuming resources.  In order to compensate future generations for the
consumption of depletable energy resources energy systems need to become more
efficient, have a larger portfolio of technologies and options to choose from,
and have drastically lower environmental impacts at all levels from local to
    Another prime energy objective in the context of sustainable development
is to avoid irreversible changes while fulfilling the above goals.  Things
that must be avoided include: greenhouse gas emissions at levels that would
provoke major disruptive changes in the climate system; sulfur emissions and
deposition that surpass the critical loads at which food production can be
sustained; and total consumption of all easily accessible fossil fuel
resources, particularly higher grades of oil and gas.  One way of 
interpreting the above conditions for sustainable energy development is to use
fossil fuels as an endowment for preparing the necessary long term transition
towards a non-fossil based energy system.
    Global primary energy use has increased by a factor of 20 since the
middle of the 19th century; an average annual growth rate of 2.2 per cent per
year. Global primary energy use, including traditional fuels, around 1860
amounted to less than 0.5 Gtoe (gigatons oil equivalent).  By the turn of the
century global primary energy use had more than doubled and surpassed 1 Gtoe
and by the 1940s, 2 Gtoe. The next two doublings took only about 20 years
each: by the early 1960s global energy use surpassed 4 Gtoe and exceeded 8
Gtoe at the beginning of the 1980s. In 1994 global primary energy use amounted
to 9.1 Gtoe.7  There is a considerable variation in energy consumption growth
rates over time and between different world regions.  For example, global
fossil energy consumption grew at five per cent per year between 1950 and
1970, at 2.3 per cent per year between 1970 and 1990, and at only 0.3 per cent
per year between 1990 and 1994.  At the same time, the mix of primary energy
sources has changed dramatically.  The legacy of the tremendous expansion in
the use of predominantly fossil fuels has, however, also become apparent. 
Since the onset of the Industrial Revolution the atmospheric concentration of
carbon dioxide increased from 280 ppm (part per million by volume) to 358 ppm
in 1994.
1.  The Role of Technological Change
    The history of economic growth and development is mirrored by
corresponding increases in energy use. In turn, the increased availability of
energy has enabled economic and human development. The enormous growth in
economic output and energy use was both driven and enabled by continuous
structural and technological changes.Since the onset of the Industrial
Revolution, two ``grand transitions'' have shaped structural changes in energy
systems at all levels. The first was initiated with a radical technological
end-use innovation: the steam engine powered by coal.  The steam cycle
represented the first conversion of fossil energy sources into work; it
allowed energy services to be site independent since coal could be transported
and stored as needed, and it permitted power densities that were previously
only possible in exceptional locations of abundant hydropower.  Stationary
steam engines were first introduced for lifting water from coal mines, thereby
facilitating increased coal production. Later, they provided stationary power
for what was to become an entirely new form of organizing production: the
factory system.  Mobile steam engines, on locomotives and steam ships, enabled
the first transport revolution as railway networks were extended to even the
most remote locations and ships converted from sail to steam.  Characteristic
energy consumption levels during the ``steam age,'' were about 2~toe per
capita per year.  By the turn of the 20th century, coal had replaced
traditional non-fossil energy sources and supplied virtually all the primary
energy needs of industrialized countries.
    The second grand transition was the increased diversification of both
energy end-use technologies and energy supply sources.  Perhaps the most
important single innovation was the introduction of electricity as the first
energy carrier to be easily converted to light, heat or work at the point of
end use.A second key innovation was the internal combustion engine that
revolutionized individual and collective mobility through the use of cars,
buses and aircraft.  Like the transition triggered by the steam engine, this
``diversification transition'' was led by technological innovations in energy
end use, such as the electric light bulb, the electric motor, the microchip
and the computer, the internal combustion engine, and aircraft.  However,
changes in energy supply have been equally far reaching.  In particular, oil
emerged from being an expensive curiosity at the end of the 19th century to
the dominant global position it has occupied for the last 30 years.
2.  Historical Trends by Energy Source
    Historical evolution of the relative shares of each of the most important
sources of energy in total global consumption, and the dynamics of structural
changes in the global energy system, as well as the relative shares of
different primary energy sources in global primary energy show that it took
about half a century before coal was replaced by crude oil as the dominant
global energy source.  At the global level, the ``time constant'' for
fundamental energy transitions has been on the order of 50 years.  At the
regional level and for individual energy technologies and devices, the
characteristic time constants are usually shorter as a result of faster
capital turnover, among other factors .
    In the energy sector the lifetime of energy equipment, and hence the
turnover and capital stock replacement rate, is generally shorter the closer
the equipment is to the end-user. Typical end-use devices such as light bulbs
are usually replaced within one year; household devices, e.g., stereo
equipment, within ten years; and residential capital equipment, e.g., boiler
for a heating system, within 20 years.  Conversely, the lifetimes of energy
facilities are much longer: fossil power plants and renewable energy projects
in the range of 30 years.  Yet longer useful lives are observed for large
hydro-schemes (dams) and for infrastructures (railway lines, roads,
underground cables). The representative lifetime of energy facilities of 30 to
50 years implies that the totality of the energy sector capital stock will be
replaced at least twice before the end of the 21st century offering numerous
opportunities for efficiency improvements and for restructuring the energy
system away from fossil fuels.
3.  Trends in Energy Use by Sector
    Sectoral energy use patterns vary considerably across different world
regions and countries.  From 9 Gtoe primary energy consumed worldwide in 1990,
about 6.5 Gtoe were delivered to final use, implying an overall primary to
final energy conversion efficiency of about 72 per cent. The 6.5 Gtoe final
energy is divided unequally among sectors.  The largest share of about 40 per
cent is due to combined energy use in agriculture, households and commercial
sectors, including the direct use of traditional, non-commercial fuels
collected and consumed locally. The next largest share of about 31 per cent is
accounted for by industrial energy uses and another six per cent by industrial
feedstock requirements (non-energy uses of fossil fuels). Globally, the
transport sector has the lowest share of about 23 per cent in all final energy
use, but the highest growth rate of all sectoral energy uses.
    In the OECD countries, final energy consumption is almost equally
distributed among the sectoral uses.  In the economies in transition,
industrial uses account for by far the largest share, and in developing
countries, agricultural, household and commercial activities.  In both the
OECD and developing countries, the highest rates of growth are transportation
energy requirements. Industrial energy use has actually decreased in the OECD
countries.  In contrast, industrial energy use is growing rapidly in
developing countries due to economic development and industrialization.
4.  Trends in Energy Patterns by Region
    Much of the increase in global primary energy consumption has occurred in
the  developed countries.  While they still consume two thirds of all primary
energy, their share is declining as the world develops.  Energy consumption is
growing rapidly, especially in the economies in some regions of Asia,  and
most of the increases in future energy consumption are expected to occur in
what are now developing countries.  Most of the historical and present energy
consumption is accounted for by the industrialized regions of the world. 
During most of the present century, growth rates of energy consumption in the
developing economies exceeded those of the industrialized countries by a wide
margin, albeit at substantially lower absolute consumption levels.  Especially
high are the growth rates of fossil energy consumption in the developing
countries, in particular during the 1950s and 1960s, averaging almost nine per
cent per year. This illustrates the rapid replacement of traditional by
commercial (fossil) energy forms in addition to and beyond the increase in
energy consumption along with economic development in these regions. Although
the growth rates have slowed down over the last decade, this process still
continues today.
5.     Energy Intensities of Economic Activities
    Another important effect of economic development and technological change
is their impact on energy intensities. Energy intensities express the amount
of energy required per unit of economic output, usually measured by Gross
Domestic Product (GDP), either for the economy at large or for particular
sectors/activities. The principal impact of technological change is that it
stimulates efficiency improvements and structural changes in economic
activities, thus generally lowering energy intensities.  The causes of energy
intensity decreases are many and complex. They include, first, technological
improvements in individual energy end use and conversion components;
structural shifts in the energy system, such as moving from coal-fired
electricity generation to a gas-fired combined cycle plant; and interfuel
substitution at the level of energy end use, like the replacement of fuelwood
by Liquid Petroleum Gas (LPG). They also include economic shifts from more to
less energy-intensive activities, and changing patterns of energy end uses,
and ultimately, changing life styles. Not every change in every one of these
categories represents a decrease in energy intensity.  But taken together, the
overall trends are persistent and pervasive.  
    Aggregate energy intensities, including noncommercial energy, generally
improve over time, and this is true in all countries. The process is not
always smooth, as data from other countries illustrate.  Periods of rapid
improvements are interlaced with periods of stagnation. Energy intensities may
even rise in the early takeoff stages of industrialization, when an energy-
and materials-intensive industrial and infrastructure base needs to be
    While aggregate energy intensities generally improve over time,
commercial energy intensities follow a different path. They first increase,
reach a maximum and then decrease.  The initial increase is due to commercial
energy carriers substituting for traditional energy forms and technologies.
Once that process is largely complete, commercial energy intensities decrease
in line with the pattern found for aggregate energy intensities.
    While the trend is one of conditional convergence across countries, the
patterns of energy intensity improvements in different countries reflect their
different situations and development histories. Economic development is a
cumulative process, incorporating in different countries different consumption
lifestyles, different settlement patterns and transport requirements,
different industrial structures, and different takeoff dates into
industrialization. Thus the evolution of national energy intensities is path
6.  Carbon Dioxide Emissions and Carbon Intensities
    Energy extraction, conversion and end use impact the environment at all
levels: local, regional, and global.  At the global level, the emissions of
greenhouse gases could possibly lead to irreversible global climate change. 
Energy is the most important single source of greenhouse gases.  It
contributes about two thirds of all anthropogenic sources of carbon dioxide
emissions, and is also a major source of methane, the second most important
greenhouse gas.  Energy-related and non-energy carbon dioxide emissions in a
number of world regions by energy source have been estimated.12  The current
levels of per capita fossil-fuel carbon emissions across the world regions
differ by a factor of 30.  A persistent per capita emission gap remains even
after including carbon emissions from land use changes, currently concentrated
in tropical latitudes.
    The largest single source of fossil fuel carbon emissions is coal, with
currently about 43 per cent share, followed by oil with about 39 per cent, and
natural gas with 18 per cent.  Adding non-energy uses of fossil fuels, such as
industrial feedstocks, reverses the shares to 40 per cent for coal and 42 per
cent for oil.  
    The process of ``decarbonization'' as the decreasing carbon intensity of
primary energy is the ratio of average carbon emissions per unit of primary
energy.  The ratio decreases due to the continuous replacement of fuels with
high carbon contents, such as coal, by those with lower carbon content or
carbon-free sources such as many renewables and nuclear energy.  At the global
level, decarbonization of energy occurs at a slow rate of about 0.3 per cent
per year.  This falls short by about 1.9 per cent of what would be required to
offset the effects of the long-term, global growth in primary energy
consumption of about 2.2 per cent per year.  This means that global carbon
dioxide emissions have been increasing at close to 2 per cent per year,
implying -- in the absence of policy measures -- a doubling before the 2030s.
    Five representative countries have been selected here to demonstrate the
different national experiences in carbon intensities.  The United States has
one of the highest energy intensities of the industrialized countries and also
one of the highest per capita carbon emissions in the world.  France and
Japan, on the other hand, have among the lowest carbon intensities but for
different reasons: in Japan this has been achieved largely through structural
changes in the energy system by substituting coal with oil and natural gas,
and in France largely through the vigorous substitution of fossil fuels by
nuclear energy. Finally, China and India represent two rapidly developing
countries where the replacement of traditional by fossil energy is still
incomplete, resulting in very high energy and carbon intensities.  Together,
these five countries account for almost half of the global energy consumption
and energy-related carbon dioxide emissions.
7.  Contributions to Atmospheric Concentration Increases
    The industrialized countries account for most (some 60 per cent) of the
present carbon dioxide emissions. They are also responsible for most of the
historical emissions. Although at much lower absolute levels, the emissions of
developing countries are growing more rapidly than in the industrialized ones.
Some 240 GtC (Gigatons of elemental carbon) have been released into the
atmosphere by energy-related activities.  This is much larger than the
estimated carbon release from deforestation and land-use changes over the same
period of some 120 GtC.   
    The significant divide between developed and developing countries in
current fossil energy carbon emissions becomes even larger when considering
their historical dimension: because of the long lifetime of atmospheric
carbon, estimates indicate that about 84 per cent of the fossil energy carbon
dioxide emissions since 1800 still remaining in the atmosphere can be
attributed to the emissions of the now industrialized countries.  The share of
developing countries in energy related atmospheric carbon dioxide buildup is,
with 16 per cent, very low, especially in view of the fact that about 70 per
cent of the people that have lived on Earth since 1800 reside(d) in these
countries. The significant differences in historical contributions to
atmospheric concentration increases between industrialized and developing
countries becomes somewhat reduced when extending the analysis to all sources
and species of greenhouse gases.
1.  Scientific Understanding of Climate Change
    Atmospheric trace gases help to regulate the temperature regime of the
Earth.  Radiation from the sun is the source of energy which drives the
climate system.  Incoming solar radiation warms the surface of the Earth. 
Much of this energy is in the visible part of the electromagnetic spectrum. To
balance the incoming energy from the sun, the Earth itself must radiate on
average the same amount of energy back to space by emitting in the infrared
part of the spectrum.  Part of the reemitted radiant heat is trapped by trace
gases in the atmosphere producing the ``greenhouse effect.'' Most of the
atmosphere consists of nitrogen and oxygen which are both transparent to
infrared radiation.  The most important infrared absorbing atmospheric gases
are water vapor and carbon dioxide which account for 90 per cent of the
natural greenhouse effect. In addition to water vapor and carbon dioxide,
other greenhouse gases include methane, nitrous oxide, and tropospheric ozone.
    Since the onset of the Industrial Revolution human activities have not
only increased the atmospheric concentrations of naturally occurring
greenhouse gases, but have also added new ones.  The anthropogenic sources of
chlorofluorocarbons (CFCs) also produce a greenhouse effect,  although this is
offset somewhat by the observed decrease in lower stratospheric ozone since
the 1970s caused principally by CFCs and halons. Human activities have altered
the concentrations of greenhouse gases both directly by anthropogenic
emissions of carbon dioxide, methane, nitrous oxide and CFCs, and indirectly
by influencing the complex atmospheric chemistry, including increases in
stratospheric water vapor concentrations, depletion of stratospheric ozone,
and increases of tropospheric ozone concentrations.
    Human activities also affect the amount of aerosols in the atmosphere
which influences climate in other ways.  They scatter some incoming solar
radiation back to space and thereby cool the Earth's surface.  A further
effect of aerosols is that many of them act as nuclei on which cloud droplets
condensate and hence alter the reflection and the absorption of solar
radiation by the clouds.  Aerosols occur naturally in the atmosphere, e.g.,
from the eruption of volcanos or by being blown off the surface of deserts.
Sulfur dioxide from coal power plants and biomass burning are the main
aerosols resulting from human activities. Previously this was thought to have
only local smog and regional acidic precipitation impacts. Recent IPCC
findings indicate that some of the net climate warming resulting from the
increased concentrations of greenhouse gases is being partially offset by
increased concentrations of sulfur dioxide.   However, the aerosol effects do
not cancel the global-scale effects of the much longer-lived greenhouse gases,
and significant climate changes can still result especially once aerosol
emissions are effectively controlled to combat local and regional air
    Analysis of observations of surface temperature indicates that there has
been a global mean warming of 0.3 to 0.6 degrees Kelvin during the last one
hundred years.  The observed trend of a larger increase in minimum than
maximum temperatures is apparently linked to associated increases in low
clouds and aerosols as well as the enhanced greenhouse effect.  In addition,
the warmest seven years on observed record have occurred since the early
1980s.  The last 15 years have on average probably been warmer than any
similar period during the last 600 years.  It is also known that the 240 GtC
of carbon dioxide emitted due to fossil fuel use and some 120 GtC emitted due
to deforestation and biomass burning have increased the atmospheric carbon
dioxide content by about 28 per cent compared to preindustrial concentration
levels.  Concentrations of other greenhouse gases such as methane, nitrous
oxide and CFCs have also increased markedly.  Their total combined effect,
without that of water vapor, is at present equivalent to an increase of carbon
dioxide by almost 50 per cent.
    Unfortunately, it is not possible to reliably determine the combined
effect of increasing concentrations of greenhouse gases and other effects of
human activities on the climate system.  Instead, theoretical models of the
atmosphere are used to determine the resulting increase in the global mean
temperature leading to a range of 0.8 to 2.2 degrees Kelvin calculated
warming.  The inertia of the climate system compared to the comparatively fast
rates of greenhouse gas concentration increases delay the resulting climate
change by 30 to 50 per cent. In addition, the anthropogenic sources of
aerosols, principally sulfur dioxide, diminish the theoretical global warming
effect by 20 to 40 percent. Thus, the observed climate change of 0.3 to 0.6
degrees Kelvin is in the lower part of what would be theoretically expected.  
    Because of the difficulty in predicting the magnitude and geographical
distribution of climate change, determination of what might be considered to
be ``dangerous'' levels of anthropogenic interference with the climate system
is primarily a policy rather than a scientific question.  People have adapted
with varying degrees of success to natural climate variability in the past. 
Since there is a large uncertainty about where, how quickly and how severe
adverse impacts of climate change might be and what might be potential
benefits, this analysis will focus on possible strategies to stabilize
greenhouse concentrations at alternative levels.
    Apart from determining ``dangerous'' levels of greenhouse gases, other
problems are posed by the objective to stabilize the concentrations of
greenhouse gases.  It is known that enhanced concentrations of most greenhouse
gases remain on average in the atmosphere for 50 to 100 years.An exception is
methane with a lifetime of somewhat more than a decade.  This has two
important implications for sustainable development.  First, a significant
decrease in greenhouse warming might take half a century or more even after
stabilizing greenhouse gas concentrations.  Second, the long time-scale of
climate change and the atmospheric lifetimes of most greenhouse gases are
almost matched by the long time scales of replacing human infrastructures,
such as the energy system.The long time constants of both the atmosphere
system and human systems imply a lag of many decades to centuries before
stabilization of concentrations is achieved and an equivalent lag before
stabilization of temperature occurs. 
2.  Range of Future Emissions
    The crucial scientific question in the context of possible climate change
is to determine different greenhouse gas emissions scenarios that bracket a
sufficiently wide range of alternative atmospheric concentration levels.  By
doing so one can explicitly specify alternative energy development paths that
correspond to different concentration levels and thus aid the policy process
of identifying stabilization of concentrations at a ``level that would prevent
dangerous interference with the climate system''.  Historical carbon dioxide
emissions levels have been calculated.11  A number of alternative
stabilization levels and emission pathways leading to them are illustrated
ranging from 450 parts per million by volume (ppmv), 550 ppmv (doubling of
preindustrial concentration), up to 750 ppmv. The alternative scenarios have
in common a doubling of global population to about 12 billion by the end of
the next century.  For simplicity, two sets of scenarios are shown.  
    The analysis of alternative scenarios indicates that their cumulative
emissions over time are the single most important characteristic for
determining the level of future greenhouse gas concentrations.  This result
means that the shape of the emissions paths is not that crucial as long as the
total emissions are not changed by a given period.  What is common to all of
the paths that lead to stabilization is that their emissions must fall to 3
GtC or less per year by the time stabilization is achieved.  This emissions
level corresponds to the capacity of natural sinks to absorb additional carbon
dioxide emitted to the atmosphere.
    An overall result of this analysis is that scenarios that lead to
stabilization at levels of about 450 ppmv have cumulative emissions in the
range of about 600 GtC by 2100.  Scenarios with cumulative emissions of more
than 1,000 GtC by 2100, result in concentrations of more than 550 ppmv, or
more than double the preindustrial levels.  Scenarios in excess of 1000 GtC
cumulative emissions by 2100 lead to continuing increases in concentration
levels beyond that period.  In comparison, the current atmospheric carbon
dioxide content is about 760 GtC.  Therefore, sustainable energy development
from the point of view of the current understanding of possible climate change
implies cumulative carbon dioxide emissions by 2100 in the range of less than
1,000 GtC.  Most of the scenarios that lead to emissions in this lower range
of the scale involve active measures to change the structure of future energy
systems so as to lead to lower environmental impacts with sufficient energy
for economic development in the world.  
    Mitigation and adaptation options and policy instruments for their
implementation need to be varied and comprehensive in view of the multitude of
pollutants, the pervasiveness of emissions across a wide range of human
activities, and especially the time scales involved in possible climate
changes. The most obvious option to mitigate against undesirable impacts of
unabated emissions is emission reduction.
    Losses occur in the conversion from less to more desirable forms of
energy and emissions of various pollutants are released into the atmosphere. 
The overall emissions released by the energy system depend on the structure
and efficiencies of energy supply, conversion, and end use. Emissions
reductions can be achieved by efficiency improvements, fuel switching and
structural change to cleaner energy forms, and by technological means of
reducing pollutants from large point sources. Two further mitigation options
are the enhancement of greenhouse gas sinks, and adaptation measures. These
options and their mitigation and adaptation potentials are assessed below. 
1.  Efficiency Improvement Potentials
    Efficiency improvements constitute the most generic mitigation option. A
more efficient provision of energy services not only reduces the amount of
primary energy required but also reduce adverse environmental impacts across
all pollutants, resource use and  energy costs.It is also the option that is
generally considered to have the largest mitigation potential.However,
although efficiency is important it is not the only determinant of an energy
systems performance. Other determinants include, for example, the availability
and controllability of energy flows, capital and operating costs, etc. Energy
can be used more or less efficiently; this sometimes depends on technical
factors or the capacity utilization, but more often it is a question of
economic and social choice, i.e., the question of lifestyles and,
consequently, the kinds of energy services that are demanded and provided.
    At the turn of the century, the prevailing efficiency of electricity
generation was about five per cent, whereas today the average efficiency in
OECD countries is about 36 per cent and the best combined-cycle natural
gas-fired power plants can achieve more than 50 per cent efficiency.  The
average aggregate efficiency of energy transformation from primary to useful
forms at the global level is about 34 per cent.   The highest efficiencies are
in the conversion of fuels from primary to secondary energy forms.  Refinery
efficiencies are about 90 per cent and, on average, the conversion, transport,
and distribution of energy has rather low losses  with efficiencies ranging
from about 60 to almost 90 per cent.
    Overall, the primary to final energy conversion processes, are quite
efficient with a global average of about 74 per cent. In comparison, final to
useful energy conversion efficiency, the domain of the energy consumers, is
very low with about 46 per cent at the global level.  In general, natural gas
and electricity have the highest end-use efficiencies compared with the lowest
primary to final conversion rates.  The lowest end-use efficiencies  are those
of biomass with about 17 per cent, mainly as a result of the predominance of
traditional end-use conversion devices in developing countries.  Overall
primary to useful energy efficiencies are 34 per cent at the global level. 
Corresponding numbers for different regions are 22 per cent in the developing
countries, and 42 percent in the economies in transition.  The most important
overall result is that energy end use is the least efficient part of all
energy systems,  and it is in this area that improvements would bring the
greatest benefits.  It also shows that even the most efficient technologies
may not be sufficient to offset the energy-intensive lifestyles prevailing in
very affluent market economies.
    The largest relative efficiency improvement potential exists in the
developing countries, followed by the transitional economies, because of the
prevalence of traditional economic patterns and inefficient energy end use
technologies in these areas.  Outdated technological vintages and, more
generally, chronic capital shortages, limit the replacement of obsolete
technologies and investment into new, more energy efficient ones.  The largest
absolute efficiency improvement potential remains in the industrialized
countries of the OECD, despite their generally more modern and energy
efficient capital stock.  
    An appropriate measure for energy improvement potentials is to determine
the theoretical minimum energy requirements for a given task, as defined by
the second law of thermodynamics (socalled exergy analysis).  The distinction
between energy and exergy efficiency is important because it allows us to
determine the ultimate potential of efficiency
improvements.  A number of studies have analyzed the efficiency of current
energy systems using second-law of thermo-dynamics of exergy analysis.  All
indicate that primary to service efficiencies are as low as a few per cent. 
Calculations of an overall primary energy to service efficiency of 2.5 per
cent for the United States have been made.8  Other estimates for individual
countries range up to 15 to 23 per cent.9  Estimates of global and regional
primary-to-service exergy efficiencies vary from ten to as low as a few per
cent .10 
    The results indicate that the theoretical potential for efficiency
improvements is very large, ranging from between a factor of 5 to 20.  The
actual realization of these potentials depends on numerous factors and
constraints, among others, technology development, transfer and diffusion,
capital availability, and appropriate economic and institutional incentives,
including removal of barriers and distortionary subsidies.  The realization of
this potential, however, presupposes the availability of financing and the
existence of the appropriate incentives.Such an analysis provides most useful
insights in identifying those areas that have the largest efficiency
improvement potentials.  For fossil energy uses these also correspond to the
largest emission reduction potentials.
2.  Fuel Switching and Substitution
     Fuel switching  option  involves structural shifts from
emissions-intensive fossil fuels to cleaner ones.  For instance, switching
from coal to natural gas reduces carbon dioxide emissions while reducing
particulates and sulfur dioxide emissions that constitute important local and
regional air pollutants. Fuel switching, e.g., from coal to gas in electricity
generation, therefore represents a considerable emission reduction potential. 
The ultimate potential of emission reduction via fuel substitution is
difficult to determine.  Regional resource availability, trade possibilities,
price differentials and geopolitical considerations   may limit fuel
substitution possibilities.  The near term potential of fuel substitution is
rather limited because the development of alternative energy supply sources,
conversion facilities, end-use devices, and the corresponding changes in
infrastructures all take considerable time.
    Over longer time periods, the emission reduction potentials increase
substantially.  Carbon emissions by the end of the 21st century of a scenario
relying on natural gas as a transitional fuel in conjunction with significant
market penetration of cost-effective nuclear and renewable energy sources,
could amount to only 7~GtC, compared to 22 GtC for a similar, but coal and
synfuels intensive scenario. For both scenarios, global energy demand is
projected to be five times higher than today.  The investments embodied in
existing energy infrastructures and regional resource availabilities constrain
the emissions reduction potentials of fuel substitution. In view of such
constraints, this option would be more effective if it were combined with
vigorous efficiency improvement efforts and ultimately with carbon scrubbing
and disposal.
3.  Structural Change to Renewables and Nuclear
    Structural change is an option that involves transformation of the energy
system from the current predominance of fossil fuels toward carbon-free energy
sources such as solar and nuclear, or toward sources that are carbon-neutral
with respect to the atmosphere, such as the sustainable use of biomass.  The
emissions reduction potentials of carbon-free and neutral energy sources is
large indeed and in the long run may exceed that of efficiency improvements. 
Studies indicate that over very long time scales it would be possible to
restructure the global energy system entirely away from the use of fossil
fuels, especially when combined with vigorous conservation and energy
efficiency improvement efforts.  In practice many factors limit the mitigation
potential of a structural change to carbon-free and carbon-neutral energy
sources such as high costs, availability of technology and capital, and other
resource constraints. For example, competing land uses between agriculture and
``energy plantations'', can limit the global mitigation potential of biomass. 
    One of the most systematic analysis of the long-term potentials of
renewables and nuclear was carried out for the World Energy Council's 1995
Congress in Tokyo.  A range of demand scenarios was explored with respect to
alternative energy supply options.  The study also considered international
trade, technology availability and costs, as well as other possible
constraints for the penetration of renewable and nuclear energy.  Hence the
resulting supply potentials identified represent a detailed techno-economic
assessment rather than a mere illustration of technical or theoretical supply
potentials.  The realization of the long-term mitigation potential of the
options given in the analysis, however, requires near-term concerted research
and development efforts. Technology demonstrations in initial niche markets to
facilitate technological learning and cost reductions are required in order
that these options become competitive with fossil fuels, particularly in the
case of renewables and biomass. In the case of nuclear, acceptable responses
need to be found to concerns about safety, waste disposal and proliferation
issues. Hence, structural change would be also a more effective option if it
were combined with vigorous energy efficiency improvement efforts.
4.  Control of Large Point Sources
     Control of large point sources  option  focuses primarily on emissions
reduction from power plants and large energy conversion facilities, similar to
the current technologies for reducing emissions of particulates matter, sulfur
dioxide and nitrogen oxides from power plants.  The theoretical emissions
reduction potential of  this option is substantial.  Possible control measures
include scrubbers for carbon dioxide removal that are applicable mostly to
large fossil power plants and some industrial processes.  In most cases the
technological feasibility of emission control has been demonstrated although
costs are still prohibitive in many cases.
    Stabilization of atmospheric methane concentrations would require a
reduction of current global anthropogenic emissions by five per cent.  Such a
reduction would correspond to about a quarter of the methane released by the
energy sector.  Current estimates indicate that the methane emission reduction
potential at negative or low costs amounts to ten per cent of anthropogenic
emissions.  The largest reduction potentials are in waste management and
agriculture.  In contrast, carbon dioxide scrubbing from flue gases is still
prohibitive economically as a large-scale mitigation strategy.  The
feasibility of scrubbing and subsequent disposal of carbon dioxide still
remains to be demonstrated on a large scale. 
    In addition, the issue of storing gigantic quantities of sequestered
carbon dioxide for potentially thousands of years remains unresolved. 
Potential carbon dioxide utilization, disposal, and storage options include
enhanced oil recovery, storage in depleted natural gas fields and other
underground reservoirs, chemical feedstocks and other basic material, and
finally disposal in the deep ocean.  All of the options involve unresolved
issues of possible long-term leakages, often unknown disposal costs, and
perhaps most importantly as yet unknown environmental impacts.
5.  Enhancement of Natural Sinks
    Enhancement of sinks is limited as a mitigation option to those
greenhouse gases that are absorbed by natural sinks, as is the case with
carbon dioxide. Large amounts of carbon dioxide are continuously removed from
the atmosphere through natural processes such as photosynthesis, weathering of
rocks,and absorption by the oceans.However, the rising concentration of
greenhouse gases indicates that, due to anthropogenic activities, emissions
have exceed the absorptive capacity of the sinks. The enhancement of sinks can
be achieved by a variety of measures.  Potential options include so-called
``geoengineering'' options such as deep ocean storage, weathering of rocks, or
``iron-fertilization'' of ocean plankton productivity.  It is not known
whether these options are feasible and whether they are associated with other
significant environmental impacts.The most important options include the
preservation and the enhancement of the terrestrial carbon sink.  Vegetation
is the largest terrestrial carbon sink.  It absorbs carbon dioxide by
photosynthesis. The obvious measure is to halt global deforestation and
enhance vegetation growth.
    Estimates of carbon releases through land-use changes during the
1980s,including deforestation, indicate a net annual flux of carbon to the
atmosphere of between 0.6 and 2.8~GtC.  This compares to about 6~GtC of
fossil-energy related emissions.  In addition to carbon dioxide emissions,
deforestation and its associated biomass burning release other gases with a
direct or indirect greenhouse effect, notably methane, nitrous oxides, and
carbon monoxide.
    Illustrative scenarios indicate that, in the absence of policy measures,
deforestation rates could significantly increase future greenhouse gas
emissions.  Annual carbon dioxide emissions could be in the range of 3 to
5~GtC during the next century leading to an eventual destruction of the
majority of the world's forests including practical extinction in the tropical
regions.  In a worst-case scenario,up to 340~GtC might be released into the
atmosphere over the next century.In comparison, the current atmospheric carbon
is about 760~GtC.  In contrast, between 100 and 150~GtC could be sequestered
from the atmosphere over the same time period through a dedicated global
afforestation program.  However, afforestation costs can vary significantly
between regions, in some cases by up to a factor of 30.  There would also be
significant impacts on world timber markets.  Regionally different strategies
must, therefore, be found to balance the impacts of a global carbon
sequestration program.  From the perspective of the protection of the
atmosphere and the carbon cycle, therefore, slowing down and eventually
halting deforestation appears a more immediate priority for the enhancement of
6.  Adaptation Measures
    Adaptation options constitutes a large number of specific, preventive
measures to enable people and natural ecosystems to adapt to possible climate
change.  This option could be employed in conjunction with mitigation
measures, or as a last resort in the case of unavoidable and significant
climate change.  Adaptation measures are not meant to protect the atmosphere,
but rather to minimize the adverse effects of possible environmental changes
due to human interference with the climate system.  They are related to the
inertia of the climate system including the cumulative nature of anthropogenic
emissions; the long lead times required between the political negotiation
process, policy actions and the resulting reductions in emissions; and the
significant time lags between stabilization of atmospheric concentrations, and
eventual climate stabilization.  All told, even in the most ambitious policy
scenarios some climate change appears inevitable as a legacy of our past,
current and medium-term reliance on fossil fuels and the long response time of
the climate system.
    People and most ecosystems have a natural capacity to adapt to changes in
climate.  For natural ecosystems, adaptation to environmental changes occurs
naturally, albeit at very slow rates.  Therefore, perhaps more important than
absolute changes in climate are the rates by which climate change occurs.  The
possibilities of human intervention to facilitate, or to speed up natural
adaptation can be considered limited, apart from some generic measures such as
the preservation of vegetation migration corridors.  This is the principal
reason why recent climate impact research identifies natural ecosystems as
being the most vulnerable to man-induced climate changes.
    The adaptation potential of socioeconomic systems are practically
unlimited within the range of environmental and climate change anticipated
over the next century.  After all, human civilization exists under a much
wider variation of climate regimes than projected by even the most drastic
future climate change scenario.  However, adaptation requires the availability
of sufficient resources, knowhow, and time; appropriate research and
development is required, as is better information and management practices. 
Others would entail potentially significant changes in practices such as
different agricultural crops or air and sea routes.  Finally, some adaptation
may entail considerable costs, such as the protection of low lying coastal
areas from sea level rise, relocation of infrastructures, or construction of
large enclosed areas for human protection.
    There are large disparities in the capacity to mitigate and adapt to
environmental changes from energy production and use among different regions
and countries.  Despite significant differences among individual countries,
the following section attempts to summarize some specifics for each of three
regional groupings in terms of impacts of global environmental change and
challenges for sustainable energy development.
    Most of the countries in the OECD region are characterized by mature and
highly developed economies with high levels of income, energy consumption and
energy-related greenhouse gas emissions, and share the highest responsibility
for the historical and current energy use and greenhouse gas emissions.  They
also have the highest near to medium-term emissions reduction potentials, the
highest financial and technological mitigation and adaptation capabilities,
and generally also the lowest vulnerability to environmental impacts. 
    Although highly industrialized, the economics in transition are
characterized by a number of unique features.  The transition process is
disruptive and is taking longer than initially anticipated.  Between 1990 and
1994, the combined economic output of the economies in transition fell by some
40 per cent.  As a consequence, primary energy demand fell by some 25 per cent
over the same time period and energy-related carbon dioxide emissions by some
30 per cent.  These countries are thus probably well below any current or
near-term commitments for stabilization of emissions as formulated within the
FCCC.  Additionally, other urgent social and economic priorities, as well as
severe capital constraints, lead to low policy priority for any specific and
additional mitigation or adaptation measures.  At the same time, the process
of economic restructuring opens further opportunities for efficiency
improvements and structural changes in the energy sector.
    It is estimated that possible impacts of climate change in the region
would not all be adverse. However, significant adverse impacts of climate
change are anticipated for most natural ecosystems not managed by man, in
particular for boreal forests.  There could also be methane releases from
permafrost areas, mainly in tundra soils and in the form of methane
clathrates, that could have a significant additional warming impact because of
the large quantities of methane captured in permafrost areas and methane's
high radiative forcing.
    Developing countries face a triple challenge.  First, their historical
and current contribution to energy-related global environmental stresses is
low, but is expected to increase in the future with the required social and 
economic development.  The share of developing countries in energy-related
carbon dioxide emissions is projected to surpass the 50 per cent mark between
the years 2035 to 2045, and reach shares between 64 per cent and 71 per cent
of global emissions by the end of the 21st century.  In the absence of drastic
policy measures, the developing countries share in global energy-related
carbon dioxide emissions would surpass 50 per cent by between 2025 and 2030
and reach between 59 and 84 per cent by the end of the 21st century.
    The second dilemma deals with the much higher vulnerability of developing
countries to possible climate changes.  There is a broad agreement among
different studies that damages from climate change account for a significantly
higher proportion of economic activities in developing countries than in
industrialized ones.  These countries also have a greater reliance on climate
sensitive activities such as agriculture.  Larger climate change impacts are
also expected in developing countries due to multiple environmental and other
stresses including poverty, population growth, pollution, desertification,
industrial and infrastructural development, etc.  The third dilemma is that
the adaptation possibilities are also more limited because of low national
incomes that result in low research and development budgets, severe capital
scarcities and limited  institutional capacities to deal with climate change. 
    The previous section gave an overview of numerous mitigation and
adaptation options for the protection of the atmosphere.  Usually, these
options highlight possible technological barriers and attractors for their
implementation, including availability, performance, costs, and environmental
compatibility.  This section focuses on nontechnical barriers and impediments,
as well as on the nontechnical attractors and incentives that have to be dealt
with as a prerequisite for the implementation of mitigation and adaptation
options.  The policy instruments include, among others, market, regulatory and
institutional measures.
1.  Policies for Sustainable Energy Development
    There are policy instrument measures that raise both public and private
awareness, as well as that help to reduce the significant scientific and
policy uncertainties involved, especially when dealing with long-term
sustainable development criteria and environmental issues.  Research, both
domestic and through international cooperation, can help to improve knowledge.
Public awareness is critical, to promote a favorable social context and
acceptance for the implementation of the numerous measures necessary of moving
societies on environmentally sustainable development pathways.  No single
mitigation option is likely to become the unique and universally adopted
solution if drastic reductions of emissions from  industrial, energy, and
consumption activities are required.  All options must be evaluated in their
different regional, national or sectoral contexts and on the basis of full
life-cycle analyses.  The combination of several mitigation options along
improved and new technology chains, plus associated synergies, will be needed
to achieve substantial emission reductions.  Considerable benefits are
attached to options that tackle greenhouse gas emissions and also mitigate
other adverse local and regional environmental problems.  This point also
clearly implies a holistic approach to environmental problems and encompasses
local and regional as well as potential global concerns.
    Likewise, no single policy measure or instrument will be sufficient for
the timely development, adoption and diffusion of mitigation options.  Special
consideration must be given to policies that foster the adoption of mitigation
technologies that enhance economic development without undermining global
environmental sustainability.  Policy instruments that enable increasing
supplies of high quality energy services, growth of per capita income and
living standards should receive the highest priority in developing countries.
2.  Policies for Energy Efficiency and Decarbonization
    To achieve these seemingly conflicting objectives of providing better,
cleaner, a higher quality and more energy services while avoiding harmful
environmental side effects, high priority must be given to efficiency
improvements.  Such improvements even using existing plant and equipment  are
substantial and can be achieved relatively quickly. The adoption of the
currently best available technologies and practices can achieve even more. 
Efficiency improvements are particularly attractive as a target for policy
instruments.  They generate multiple benefits: lower resource consumption,
reduced environmental impacts and lower system costs.  Productivity growth of
all factor inputs, including energy, is, therefore, a prerequisite for
sustainable economic development.  Another class of options that promise the
generation of multiple benefits is the decarbonization of the energy system. 
Decarbonization involves shifts to low-carbon and carbon-free energy sources
and carriers.  The possible implementation instruments for energy efficiency
improvements and decarbonization fall into at least four categories: global
and international, regional and national, sector specific, and technology
(chain) specific.
3.  Market and Nonmarket Policy Instruments
    The following generic policy instruments are applicable to the four
categories specified above.  The broadest division is in market and nonmarket
instruments. Market instruments include taxes, fees, tax exemptions, subsidies
(including accelerated depreciation provisions), tradable permits, polluter
pays principles and the internalization of environmental externalities.
Nonmarket instruments include information, advertisements, education,
standards, and legal and institutional regulations, bans, and controls.  Most
of these market and nonmarket instruments may work in both directions,
removing or establishing barriers, or promoting or hampering progress.  
    In the short run, the most promising area for the application of these
instruments are the energy end-use sectors.  The same also applies for the
control of chlorofluorocarbons.  To a large extent, energy end-use conversion
accounts for the highest inefficiencies within the energy system.  Because of
the huge number of economic agents involved and the difficulty in developing
equitable economic incentives, nonmarket instruments, such as building codes,
vehicle standards, or stack emission regulations, have been successfully
employed by many countries.  Since the efficiency improvements in the end-use
sector are the key for meeting the sustainable development objective, policy
instruments need increasingly to focus on this sector.  
    Recently, a hybrid of policy instruments encompassing nonmarket  and
market elements has gained momentum.  Integrated resource planning (IRP) and
demand side management (DSM) are instruments imposed on utilities by
regulatory institutions with the objective of shifting the focus of utility
businesses from selling, for example, just kWhs to selling energy services. 
DSM and IRP enhance the prospect for the development of combined heat and
power (CHP) and district heat energy systems, furthering substantial
efficiency gains.  Greenhouse gas emissions and the possibility of climate
change are global phenomena; it is, therefore, self-evident that international
policy implementation is required.  The Framework Convention on Climate Change
provides provisions for such measures, e.g., joint implementation schemes. 
The specific details for implementing these schemes still require careful
negotiations, especially the provisions for possible crediting of emission
    There is no scarcity in human ingenuity that can be exploited to move
onto the path of sustainable development.  The main questions concern the
policy instruments required to promote, for example, technology capacity
building and transfer, efficiency improvements and decarbonization at
unprecedented levels.  In many instances, new policy initiatives can build on
existing trends towards more efficient stewardship of resources.
    New institutional arrangements, including both market and nonmarket
instruments need to be introduced at the global level.  Instruments for the
promotion of sustainable development and for a major reduction of adverse
environmental impacts would have to reach beyond voluntary compliance or
reliance upon market forces alone.  The deal here is not so much one of market
failure, i.e., wrong or misleading market signals, but with a situation of
market exclusion.   In numerous cases, important issues such as externalities
have been excluded from any consideration in the market place.  Again, it is
unlikely that these instruments would be justified or implemented solely for
responding to individual environmental challenges. Clearly, policy instruments
need first to be linked to local and regional development priorities such as
the improvement of energy services, as well as the improvement of local air
quality and other adverse impacts of energy supply and use.  Some of these
instruments require monitoring the progress of policy implementation and
measures to ensure compliance.
4.  Regional and National Policy Instruments
    Policy instruments also need to account for regional differences in the
levels of human development and the resulting social and development
imperatives, levels of resource endowments, and economic and technological
vintage structures.  Implementation instruments in regions with large hydro,
wind, biomass or natural gas resources would be different from those in
regions with small energy resource endowments.  Alternatively, if deep ocean
carbon dioxide disposal turns out to be environmentally acceptable, it is
primarily of interest to some coastal regions. Likewise, the option of carbon
dioxide reinjection into depleted gas fields is only feasible in gas-producing
regions. Another promising option is a strong reliance on biomass. However,
adequate land availability can  become a limiting factor. For most renewable
sources of energy, including modern biomass, development can also have adverse
local environmental impacts which may create other limitations.
    Until the 1980s, regulation was the dominant environmental policy
instrument at the national and regional levels. Recently, economic and
market-oriented approaches have gained momentum.  The application of market
instruments at the macroeconomic level is intended to establish undistorted
pricing mechanisms and competitiveness.  In the energy sector alone removal of
distortionary fuel price subsidies is estimated to lead to substantial
efficiency gains of up to 18 percent of emissions.  Many of these measures may
also be needed to establish an equal-level playing field. 
5.  Policy Instruments for Adequate Financing
    Neither the establishment of level playing fields nor temporary
protection can overcome one major economic barrier, especially in the
developing countries: namely, the chronic lack of capital. Even if a project
has lower life-cycle costs and emissions but higher upfront capital
requirements compared with its alternatives, it simply may not attract the
necessary financing.  In addition, energy and environmental measures compete
for limited capital with many other development needs.  Developing countries
face many urgent problems such as the eradication of poverty, famine,
malnutrition, substandard housing, locally contaminated water and air, etc.
All compete for scarce resources. 
    Even in the industrialized countries, where financing for
capital-intensive projects is easier to obtain, there are major barriers to
efficiency improvements and energy sector restructuring and decarbonization at
the national level. Often, higher returns can be obtained in areas other than
the energy sector.  The promotion of flexible, small-scale but mass-produced
supply and conversion plants and equipment would help resolve some of the
financing difficulties by reducing the risk, uncertainty, and upfront capital
6.  Policy Instruments for Enhancing Knowledge and Skills
    A special problem is the variation of general technology-related
knowledge, experience and skills among regions and countries.  The developing
countries' endowment of knowhow and know-why required to induce the
development, import and adoption of new technologies often lags behind that of
developed countries. There is a need for reliable, impartial information on
available technologies, including detailed descriptions.  Much of the
information about mitigation options and implementation instruments is
tailored to the needs and situations in the developed countries, and hence of
limited use in the developing countries.  Evaluations and technology
assessments of how different options fit into diverse local situations and
development needs are also important requirements.  Hence, local capacity
building is essential.  Additional nonmarket barriers include institutional
and legal frameworks, procedural requirements, language barriers, and the
provision of spare parts and maintenance. 
    Technology appropriateness is also an issue that must be specifically
addressed.  The industrialized countries also need to provide for initial
niche markets for new environmentally benign technologies in order that
learning curve effects and associated cost reductions are exploited to a
maximum before technologies are transferred to the developing countries.  
Existing international financial instruments for economic development are
seriously out of tune with the innovation needs in the developing countries. 
Here, policy should encourage and support indigenous innovation impulses and,
as noted, enhanced local capabilities.
    Provisions of safety and health measures in the workplace have been
integrated into the legal and institutional frameworks of modern societies. In
short, they are part of a social contract. The implementation of mitigation
options at the regional and national levels also requires their inclusion in
the social contract. A collective implementation of mitigation policy
instruments is required; this is not a question of single technology options;
it is a sociocultural process as well as one of technology and economy.
7.  Sector and Technology Specific Policy Instruments
    Policy instruments affecting the entire energy system include emission
and energy taxation or regulatory provisions and standards. With the exception
of fossil-fueled electricity generation, the energy supply sector accounts for
a smaller share of total energy-related greenhouse gas emissions than the
energy end-use sectors. Therefore, carbon taxes levied at the point of
emissions would be collected primarily at the level of end-use, and thus only
indirectly affect the nonelectric energy supply sector.  An important generic
aspect of regulatory measures is that they must restrict themselves to
establishing more comprehensive costing principles by internalizing
externalities, and focus on performance and environmental standards rather
than prescribing particular technologies.
    Most innovations spread from centers of initial adoptions.  Establishing
special ecozones might help catalyze and accelerate sustainable development
and the promotion of environmentally friendly technologies.  Policy should
support the creation of fertile socioeconomic conditions.  Likewise, broad
market instruments are required create a conducive environment for accelerated
innovation and research and  development.  The fourth category of
implementation instruments is technology-specific and thus very heterogeneous.
It involves the promotion and development of individual technologies and their
combinations into entire technology chains. The most important instruments in
this category involve the removal of nontechnical barriers to the innovation
and adoption of new technologies and the creation of new attractors for
development and diffusion. 
    In addition to promoting the research and development of the physical
aspects of technology, policy instruments should include paper- and
software-embodied technology. Manuals, operating procedures and programs are
all an integral part of enhancing local skills and knowhow. Skills and knowhow
in turn have to be acquired through formal education, training programs and
learning by doing. The human embodiment of technological knowledge is very
important.  Not only does it determine the internal capabilities for
appropriating economic and social gains from technologies; it also determines
the capacity for further innovation and the adaptation of new technologies and
practices. Capacity building and the development of human resources should be
a high priority in any technology development and transfer program, especially
at the technology-specific level. 
    Another critical aspect is the transfer of technology and knowhow from
the laboratory and development stage to commercialization and subsequent
diffusion. Policy instruments include tax exemptions, subsidies with sunset
clauses, rewards for technical excellence, end-user subsidies, promotion of
integrated resource planning, and, where necessary, temporary protective
measures. More importantly, the policy instruments should remove barriers to
innovation such as protective subsidies for mature technologies and other
market imperfections.  Research and development policy should make available
sufficiently earmarked and stable funding for the development of technologies
with long lead times. This condition is of particular importance when the
development of a whole set of new technologies is involved.
    In the case of a transition to completely new production and energy
systems and technologies, sometimes called technological leap-frogging, it is
important to take account of additional social costs for new infrastructures
and supporting systems.  A potential barrier might be the need to maintain
both the old and the new systems during the transition period leading to
additional social costs and perhaps also unsatisfactory services.  It is,
therefore,  important for the government or some appropriate public body to
promote the new systems and remove the hidden barriers until they reach
    Once a new technology reaches commercialization, a new set of instruments
is required to promote flexibility and cost reductions along the learning
curve. In the case of modular and flexible technologies, cost reductions
through ``learning by doing'' and ``learning by using'' can indeed be
significant.  In other cases, such as the production of large amounts of
biomass, the learning curve effects could be more limited.
       New problems, however, may emerge with increasing scales of
production.  Examples in energy supply are particularly numerous, e.g.,
without appropriate regulatory policy instruments the stepped-up use of
natural gas in energy supply would decrease carbon dioxide emissions possible
risk of increasing methane emissions.  Each generation of technology has a
tendency to solve old problems and yet create new ones. Exceptional care and
anticipatory analysis will have to be taken if the policy instruments
introduced for  bettering the human condition at the same time as protecting
the environment are to avoid the creation of a new round of problems and
    1  Report of the first session of the Committee on New and Renewable
Sources of Energy and on Energy for Development; Economic and Social Council
Official Records Supplement No. 5 - E/1994/25.
   2  Energy and Protection of the Atmosphere (1996), Nakiženoviž, Nabojža
and Arnulf Gršbler, Environmentally Compatible Energy Project, International
Institute for Applied Systems Analysis, Laxenburg, Austria.
    3  Smil, V., 1994.  Energy in World History, Westview Press, Boulder,
    4  Hall, D.O., 1991. Biomass energy. Energy Policy October 1991:711--736.
    5  IEA (International Energy Agency), 1994a. Energy Statistics and
Balances of OECD and Non-OECD Countries 1971--1992, OECD, Paris, France. 
    6  BP (British Petroleum), 1995 (and earlier volumes). BP Statistical
Review of World Energy, BP, London, U.K.
    7  IIASA-WEC (International Institute for Applied Systems Analysis and
World Energy Council), 1995.  Global Energy Perspective to 2050 and Beyond. 
WEC, London, U.K.
    8  Ayres, R.U., 1988.  Energy Inefficiency in the US Economy: A New Case
for Conservation, Carnegie-Mellon University, Pittsburgh, USA.
    9  IPCC (Intergovernmental Panel on Climate Change) SAR (Second
Assessment Report), 1995. Synthesis of Scientific-technical Information
Relevant to Interpreting Article 2 of the Framework Convention on Climate
Change. IPCC, Geneva, Switzerland.
    10 Gilli, P.V., Nakiženoviž, N., and Kurz, R., 1995.  First- and second
law efficiencies of the global and regional energy systems.  In: Proceedings
of the 16th World Energy Congress Division 3 Rational Energy End-use
Technologies PS/SRD 3.1:229-248, WEC, London, U.K. 
    11 Ibid op cit 2
    12 Ibid
Figure 1.  Primary energy use in 1990 (in toe per capita), by source, compared
to population (in million), for different world regions
Source: Department for Policy Coordination and Sustainable Development of the
United Nations Secretariat, based on IIASA - WEC, 1995.
Figure 2.   Primary energy (toe per capita) versus GDP per capita (1990 US$ at
market exchange rates and purchasing power parities) for selected world
regions and two historical trajectories for the USA (1800-1990 and Japan
Source: Department for Policy Coordination and Sustainable Development of the
United Nations Secretariat, based on IEA, 1994a and World Bank, 1995
Statistics. Historical data are based on Nakicenovic, 1984 and Maddison, 1989.