Ancillary Benefits of Climate Policy

This chapter provides an ex-ante, quantitative assessment of the synergies and trade-offs between the implementation of the Paris Agreement and sustainable development. It develops a framework for comparing historical and future sustainability performance that combines a Computable General Equilibrium model for describing future global and regional baseline and policy scenarios to 2030 with empirically-estimated relationships between macroeconomic variables and sustainability indicators. Results indicate that the commitments submitted within the Paris Agreement reduce the gap toward a sustainable 2030 in all regions, but heterogeneity across regions and sustainability indicators call for complementary sustainable development polices.

Sustainable development (SD) co-benefits have increasingly become relevant in the discussions about the performance of international carbon market mechanisms. Actually, the Clean Development Mechanism (CDM) of the Kyoto Protocol always had the formal objective to promote SD. However, the principle of sovereignty has prevented mandatory rules to ensure the actual accrual of SD co-benefits. After increasingly strident media and NGO criticisms about CDM projects actually leading to negative impacts on SD, the UNFCCC CDM regulators provided a voluntary tool for SD benefit assessment. However, only a very small share of CDM activities has actually used this tool. The main drivers for ensuring SD benefits nowadays are the heightened political sensitivity about the linkages between climate and sustainable development since the adoption of the Agenda 2030 as well as differentiation of demand for international credits, with a number of buyers having prohibited the import of credits with perceived low SD contributions. For the new market mechanisms under Article 6 of the Paris Agreement (PA), the rules currently under negotiations foresee a continuation of the voluntary approach to SD contributions. It remains to be seen whether buyer power enforces a ‘de facto’ SD benefit regulation.

Most of these ancillary benefits can be attributed to the simultaneous reduction of conventional air pollution and the corresponding reduction of human health risk. This paper is an attempt to examine the positive effects of climate policy on long-term economic growth. The paper considers a stylized economic growth model with two production technologies, one represents an “old” and another a “new” technological structure. Transition of an economy from an “old” to a “new” technological structure may generate non-concavity in the aggregated production function with local segments of increasing returns. Presence of increasing returns on macro level results in multiple equilibrium and in multiple steady states. Under some conditions climate policy may induce the transition of a low- or middle-income economy to a higher steady state, while in the absence of climate policy an economy may end up in a development trap. Climate policy uncertainties decrease the probability of an economy to converge to a higher steady state

This study aims to increase the long-term feasibility of international environmental agreements (IEAs) between asymmetric countries via a repeated game model by considering the effect of the ancillary benefits of climate policy. Generally, climate change mitigation generates not only primary public benefits, but also ancillary benefits. This study supposes that all countries have two-sided asymmetry: the public and ancillary benefits and cost parameters, which are high and low, respectively. The IEA model with a repeated game considers that a strategy dictates participating countries’ actions. Consequently, ancillary benefits affect the conditions under which participants cooperate in line with the strategy. Moreover, we find the minimum number of participating countries that needs to be satisfied before the agreement starts by considering the method for the selection of the countries that punish a deviator from the agreement between two types of countries so that our strategy is always effective. Additionally, the findings show that there is a possibility that ancillary benefits relax the condition of minimum participation. The results suggest that participating countries should recognize the effect of ancillary benefits when they negotiate on climate change mitigation.

Climate policies regularly have various effects of different degrees of publicness. Therefore, they constitute so-called impure public “goods.” Cornes and Sandler (Econ J 94:580–598, 1984) developed the standard approach to analyze such goods, which combines elements of Lancaster’s (J Polit Econ 74:132–157, 1966) characteristics approach and the rationing literature. The impure public goods approach has been extended in many respects in recent years and was applied to fields as diverse as climate protection, military alliances, agricultural research, terrorism, and performing arts. Yet, the complexity of the analysis often makes it difficult to observe the mechanisms that work in the context of impure public good provision and this chapter concludes that a further development of analysis tools is desirable in order to facilitate the understanding of the very important category of impure public goods.

This chapter focuses on private ancillary benefits from climate protection activities and their potential to work as motivating factors for individuals and their climate-friendly activities and support of climate policies. In contrast to the primary benefits on the climate, private ancillary benefits appear to be more attractive to the individual as they directly increase their utility in the short run and are associated with less uncertainty. We discuss existing empirical literature on financial advantages, internal satisfaction, health benefits, and fairness as secondary benefits. We do not come to a clear conclusion and recommendation whether actors from the public and private sector should lay more emphasis on the secondary private benefits when promoting climate protection measures. Empirical evidence is either scarce or mixed or both, such that the chapter points out future research needs in this respect.

Drawing on the example of Cobb–Douglas preferences, we show how the impure public good model can be traced back to the conventional pure public good model. On the one hand, this approach allows applying the aggregative game approach for establishing existence and uniqueness of the Cournot–Nash equilibrium in the voluntary contribution game. On the other hand, differences between the impure and the pure public good model become evident, for instance, the emergence of noncontributors in the Cournot–Nash equilibrium is less likely in the impure public good model. Furthermore, Warr neutrality, i.e., invariance of the Cournot–Nash equilibrium when income is redistributed between contributors, cannot be expected a priori in this model.

Ambitious targets like the ones formulated in the Paris Agreement at the United Nations Climate Change Conference (COP 21) cannot be achieved without a decarbonisation of the transportation sector. Like other policy interventions, policies focusing on this sector will be linked with primary and ancillary effects. In this study, we assess to what extent stakeholders will benefit or suffer from a switch to e-mobility by applying the ancillary benefit approach. Since the attitudes of stakeholders depend on many different factors and the list of factors differs between the stakeholders, an appropriate assessment of a decarbonisation of the transport sector requires the consideration of a broad range of factors including the weighting of options by actors. Using a multi-criteria approach we show that stakeholders, like car users and vehicle manufacturers, will show resistance if they are urged to go for e-mobility. Since the assessment of the characteristics of e-mobility is linked with high uncertainty, we conducted intensive sensitivity analyses. According to these analyses, it is difficult to cause a shift in the attitude of car users towards electric vehicles, since electric vehicles have a lot of disadvantages for the car users (including loss of comfort). According to our assessment, hybrid cars face less resistance since the technology is linked with more benefits/less negative effects for the stakeholders than e-mobility.

Climate policies often provide benefits that are additional to the policy’s primary goal. Ancillary benefits have been extensively analysed for climate mitigation, while less attention has been paid to the co-benefits of adaptation. The aim of this chapter is to present an overview of the potential ancillary benefits of adaptation policies, from an economic, social and environmental perspective. Economic co-benefits of adaptation may arise from reducing the vulnerability to current climate variability, reducing background risk or creating the space for developing new products and services. From a social perspective, the ancillary benefits of adaptation have focused to a great extent on health co-benefits, and from an environmental point of view, these arise mainly from ecosystem-related adaptation approaches. Co-benefits or ancillary benefits of climate policies can be important in magnitude and may play a significant role in fostering climate policies and increasing their acceptability. However, there is little evidence of the extent to which ancillary benefits are being accounted for when planning for adaptation. If and how co-benefits might be integrated into climate adaptation design would be an interesting and policy-relevant question to address in future research.

Notwithstanding any mitigation efforts, adaptation to climate change is necessary to combat climate damage. The decision to implement adaptation measures should not solely be based on their mere adaptation effect but also on their ancillary effects on other domains. The authors provide a synthesis of the literature reflecting both beneficial and harmful impacts of adaptation measures on other areas. They discuss the side effects of adaptation in five different fields: (1) mitigation, (2) ecological systems, (3) economic development, (4) decisions under uncertainty, and (5) disaster resilience. Based on this broad review, they highlight the difficulty to assess co-benefits and conflicts of adaptation due to the complex interlinkages between the domains, the remaining uncertainty, and the consideration of unquantifiable values.

Ancillary benefits of Carbon Capture and Storage (CCS) are defined as positive effects of CCS deployment that are additional to the primary climate change mitigation effect through reduced carbon dioxide emissions. One category of ancillary benefits of CCS is the use of carbon dioxide for synthetic fuels, chemicals and plastics, building materials, and Enhanced Oil Recovery (EOR). A second category of ancillary benefits is related to removal of carbon dioxide from the atmosphere, which is deemed necessary in many climate policy scenarios, where CCS deployment is essential for two removal technologies, namely Bioenergy with CCS (BECCS) and Direct Air Capture (DAC). A third category is new industry opportunities associated with geological storage of carbon dioxide services, and production of carbon dioxide capture equipment. The last category examined is benefits of CCS for petroleum producing countries in a carbon-constrained world, since more of the resource rent from petroleum production can be kept by producers instead of being transferred to governments in consuming countries as revenue from taxing or sales of carbon dioxide emission allowances.

The health co-benefits of mitigation strategies across different regions of the world are compared with the mitigation costs using state-of-the-art modelling and health benefit estimation methods. Global co-benefits exceed mitigation costs for both the 2 °C and 1.5 °C targets. At the national/regional level the co-benefits only exceed the mitigation costs of India. In other regions they still make a major contribution to reducing overall costs. Given these findings the chapter examines why co-benefits have played a small role in climate policy. Reasons include interpretations of the value of the health co-benefits, especially premature mortality, not accounting for some important non-health economic co-benefits and the asymmetry between diffuse co-benefits versus concentrated mitigation costs. The chapter offers some ways of addressing these factors to make co-benefits more central in climate policy.

It is widely recognized that Brazil has achieved a great degree of greenhouse abatement mainly due the 70% reduction in the deforestation rate combining control instruments as the improvement of monitoring system and sanction enforcement on forest management plus restrictions to agricultural expansion in the region. Brazil’s INDC is even more ambitious with a target of 90% reduction. In addition to non-use values attached to biodiversity, forest protection generates important local use from extractive production, greenhouse gas mitigation and climate regulation effects on agriculture, cattle raising, and hydroelectricity production. But the incentive power of the current control measures of forest policies has reached its limit and requires a more complex set of incentives that internalize pricing signals. One way to pursue is to count payments for the performance on the reduction emission of forest deforestation and degradation (REDD+). The chapter, after reviewing estimates of the ancillary benefits from land use mitigation options in Brazil, presents an Integrated REDD+ that catalyzes the transfer of financial resources to the land use sector, while ensuring that non-REDD+ options continue to receive financial resources for the innovation and decarbonization of industrial, transportation, and energy activities.

According to the latest estimates presented by IMO in “Third IMO GHG Study 2014” total shipping sector emitted 938 million tonnes of CO₂ in 2012 that is about 2.6% of the total global CO₂ anthropogenic emissions for that year. Although shipping is the most energy-efficient mode of mass transport and only a modest contributor to overall CO₂ emissions, a global approach to further improve its energy efficiency and effective emission control is needed, as sea transport will continue growing apace with world trade. Emissions from international shipping cannot be attributed to any particular national economy due to its global nature and complex operation. This chapter covers policy measures towards climate and environmental protection within the shipping sector and in doing so, provides a detailed overview of the existing regulations of IMO and EU, analysing ancillary benefits of climate change policies.

This chapter calculates an index of decoupling economic growth from CO₂ and PM_2.5 emissions, respectively, to examine the synergies of low-carbon development and green development in China’s 30 provincial cities and introduce a simultaneous equations model to quantify the interdependence of climate change mitigation and atmospheric pollutants control in both directions. The results for decoupling show that China’s provincial cities have transitioned over time to a stronger decoupling with respect to both CO₂ and PM_2.5 emissions, and synergies of low-carbon development and green development have mostly been observed in cities with a high level of economic development and large population size in the eastern part of China. The results of empirical analysis reveal that co-benefits of CO₂ abatement and PM_2.5 reduction vary within provincial cities and time periods in China.

Emerging economies face multiple development challenges—rapid economic growth, proliferation of urban centers, environmental degradation, and growing infrastructure demand in an increasingly warming world. This is further accentuated by low performance of their cities on parameters of social development, equity, functional autonomy, and financial capacity. In the last decade or so, co-benefits approach has proved to be a key mechanism that provides both vertical cross-linkages between institutions (global, national, and local objectives) on the one end and horizontal interactions between development, environment, and climate policies. It thus becomes crucial to assess the relevance of co-benefits in emerging economies and draw from their early experiments. This investigation analyses the assessment tools, lessons learned, and knowledge gaps with the overarching aim to discern policy imperatives that moderate current unsustainable pathways of urbanization. Adopting a case study methodology, the chapter tests the applicability of urban co-benefits as an approach in India, China, Brazil, and Turkey, which together comprise about half of global urban population, underpinning how to promote concerted climate action based on scientific principles and specific contextual needs.

Mobility is a major source of greenhouse gas emissions. At the same time, urban air pollution is a major public health issue in both North and South countries. This project aims to show the synergies between short-term public health issues related to pollution and the reduction of greenhouse gas emissions. MobilAir, in a fundamentally interdisciplinary approach, aims to identify specific measures to significantly reduce urban air pollution and its impacts. Building on the multidisciplinary richness of the Grenoble campus, MobilAir will develop an integrated approach in the Grenoble urban area, a relevant pilot area. MobilAir aims to develop methods and tools that can be replicated in other cities in France or abroad. Specifically, MobilAir has three main objectives: (1) A better comprehension of the population’s exposure to pollution; (2) A detailed understanding of the determinants of mobility behaviour and (3) Support for public decision-making.