9.5 Areas for Further Research
The literature on sectoral economic costs and benefits is limited and additional
research would be beneficial in all areas. Specific issues identified in this
chapter (not in order of priority) include:
- Additional research on the impacts of climate change policies on the fossil
fuel industries is needed. Questions include:
- the apparent anomaly between studies indicating significant decreases
in the demand for oil in Annex B countries, and studies indicating significant
increases in the demand for transportation fuels, the major user of oil;
- whether in the medium term (10 to 30 years) reserves of conventional
oil are limited, which would soften the impact of climate change policies,
or whether they are plentiful; and
- whether the demand for natural gas will decrease as a result of a general
decrease in the demand for fossil fuels, or increase, as a result of fuel
switching from higher carbon content fuels and growth in demand in non-Annex
- The impacts of climate change policies on the financial industries have
not been analyzed. IPCC (2001) details the potential impacts, positive and
negative, of climate change on the financial industries, but there appears
to be no literature evaluating the degree to which mitigation policies would
affect these impacts.
- The applicability of existing climate policies, and their impacts on the
aviation industry and the shipping industry have not been adequately studied.
Further analysis is needed to determine the efficiency, effectiveness, and
equity of various policy options, particularly involving taxation, on limiting
GHG emissions from aviation and shipping. This would include the difficulties
involved in changing the current treaty structure to allow for the taxation
of aviation fuel. The International Maritime Organization is studying GHG
emissions from shipping. The International Civil Aviation Organization is
currently analyzing policy options for aviation and is expected to complete
its evaluation by September, 2001.
- Further study would be helpful to determine the degree to which employment
growth in the industries that would benefit from climate change policies (e.g.,
renewable energy) would offset the decrease in employment in industries that
would suffer as the result of climate change policies (e.g., fossil fuels).
These studies could also consider frictional unemployment.
- More generally, an assessment is needed of how sectoral costs of mitigation
can be minimized and distributed more equitably, both at the national and
the global levels. Babiker et al. (2000) found that macroeconomic costs for
the US increased when climate change policies excluded one or more economic
sectors. However, this study did not indicate the benefits, if any, to the
- More research is needed on the ancillary and co- benefits of GHG mitigation
and other objectives of transport policies (reductions in air pollution, lower
levels of traffic congestion, fewer road crashes).