Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock

Mitigation investments in long-lived capital stock (LLKS) differ from other types of mitigation investments in that, once established, LLKS can lock-in a stream of emissions for extended periods of time. Moreover, historical examples from industrial countries suggest that investments in LLKS project...

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Bibliographic Details
Main Authors:	Shalizi, Zmarak, Lecocqiu, Franck
Language:	English
Published:	Washington, DC: World Bank 2012
Subjects:	World Development Report 2010
Online Access:	http://hdl.handle.net/10986/9062

id	okr-10986-9062
recordtype	oai_dc
spelling	okr-10986-90622021-04-23T14:02:44Z Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock Shalizi, Zmarak Lecocqiu, Franck World Development Report 2010 Mitigation investments in long-lived capital stock (LLKS) differ from other types of mitigation investments in that, once established, LLKS can lock-in a stream of emissions for extended periods of time. Moreover, historical examples from industrial countries suggest that investments in LLKS projects or networks tend to be lumpy, and tend to generate significant indirect and induced emissions besides direct emissions. Looking forward, urbanization and rapid economic growth suggest that similar decisions about LLKS are being or will soon be made in many developing countries. In their current form, carbon markets do not provide correct incentives for mitigation investments in LLKS because the constraint on carbon extends only to 2012, and does not extend to many developing countries. Targeted mitigation programs in regions and sectors in which LLKS is being built at rapid rate are thus necessary to avoid getting locked into highly carbon-intensive LLKS. Even if the carbon markets were extended (geographically, sectorally, and over time), public intervention would still be required, for three main reasons. First, to ensure that indirect and induced emissions associated with LLKS are taken into account in investor�s financial cost-benefit analysis. Second, to facilitate project or network financing to bridge the gap between carbon revenues that accrue over time as the project/network unfolds and the capital needed upfront to finance lumpy investments. Third, to internalize other non-carbon externalities (e.g., local pollution) and/or to lift barriers (e.g., lack of capacity to handle new technologies) that penalize the low-carbon alternatives relative to the high-carbon ones. 2012-06-26T15:37:20Z 2012-06-26T15:37:20Z 2010 http://hdl.handle.net/10986/9062 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Washington, DC: World Bank Africa Europe and Central Asia Middle East and North Africa Latin America & Caribbean East Asia and Pacific South Asia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	World Development Report 2010
spellingShingle	World Development Report 2010 Shalizi, Zmarak Lecocqiu, Franck Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
geographic_facet	Africa Europe and Central Asia Middle East and North Africa Latin America & Caribbean East Asia and Pacific South Asia
description	Mitigation investments in long-lived capital stock (LLKS) differ from other types of mitigation investments in that, once established, LLKS can lock-in a stream of emissions for extended periods of time. Moreover, historical examples from industrial countries suggest that investments in LLKS projects or networks tend to be lumpy, and tend to generate significant indirect and induced emissions besides direct emissions. Looking forward, urbanization and rapid economic growth suggest that similar decisions about LLKS are being or will soon be made in many developing countries. In their current form, carbon markets do not provide correct incentives for mitigation investments in LLKS because the constraint on carbon extends only to 2012, and does not extend to many developing countries. Targeted mitigation programs in regions and sectors in which LLKS is being built at rapid rate are thus necessary to avoid getting locked into highly carbon-intensive LLKS. Even if the carbon markets were extended (geographically, sectorally, and over time), public intervention would still be required, for three main reasons. First, to ensure that indirect and induced emissions associated with LLKS are taken into account in investor�s financial cost-benefit analysis. Second, to facilitate project or network financing to bridge the gap between carbon revenues that accrue over time as the project/network unfolds and the capital needed upfront to finance lumpy investments. Third, to internalize other non-carbon externalities (e.g., local pollution) and/or to lift barriers (e.g., lack of capacity to handle new technologies) that penalize the low-carbon alternatives relative to the high-carbon ones.
author	Shalizi, Zmarak Lecocqiu, Franck
author_facet	Shalizi, Zmarak Lecocqiu, Franck
author_sort	Shalizi, Zmarak
title	Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
title_short	Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
title_full	Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
title_fullStr	Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
title_full_unstemmed	Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock
title_sort	climate change and the economics of targeted mitigation in sectors with long-lived capital stock
publisher	Washington, DC: World Bank
publishDate	2012
url	http://hdl.handle.net/10986/9062
_version_	1764408320261619712

Climate Change and the Economics of Targeted Mitigation in Sectors with Long-Lived Capital Stock

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