Professional Documents
Culture Documents
Low-Carbon
Development
For Least Developed
Countries
Alex Bowen and Sam Fankhauser
GranthamResearchInstituteonClimateChangeandthe
EnvironmentandCentreforClimateChangeEconomicsandPolicy,
LondonSchoolofEconomicsandPoliticalScience
August 2011
This paper examines the rationale for Least Developed Countries (LDCs) to pursue low-
carbon growth paths, and identifies areas where such countries can contribute to
mitigation whilst retaining a focus on poverty reduction. It argues low-carbon growth
paths, appropriate to the needs of LDCs, ought to be explored now. Policies for low-
carbon development offer an opportunity to share in the benefits of green growth,
address a range of existing market and government failures in LDCs, and provide low-
cost options for global emissions reductions. Synergies between poverty alleviation and
emissions reduction exist in the forestry and agriculture sectors, as well as rural
electrification. But elsewhere there may be trade-offs, for instance in the transport and
industrial sectors. Where additional costs are involved, these should not be borne by
poor people, making it vital that an international framework is in place to assist LDCs,
with rich countries compensating them for measures they undertake that go beyond their
immediate development interests.
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CONTENTS
EXECUTIVE SUMMARY ............................................................................................................................. 3
1. INTRODUCTION ..................................................................................................................................... 4
5. Conclusions............................................................................................................................................... 15
REFERENCES ............................................................................................................................................... 16
NOTES ........................................................................................................................................................... 18
ACKNOWLEDGEMENTS ......................................................................................................................... 23
Source: World Bank (2010), Figure 1.3(a), based on data from McKinsey & Company.
So, as far as the location of emission cuts are concerned, developing countries in general offer the world
several low- or no-cost options for emissions reductions. The narrower group of LDCs offers somewhat less
scope, given their low levels of energy- and industry-related emissions, but the opportunities in agriculture
and forestry are substantial, especially relative to their levels of GDP.
This is good news for two reasons. First, it means that some mitigation in LDCs (for example, by improving
forest management, introducing local solar power and reducing the use of unmanaged traditional biomass
for heating and cooking) could raise their productivity and employment while improving access to energy,
providing an incentive for LDC authorities themselves to adopt low-carbon growth strategies. Second, it
provides an incentive to industrial countries to pay for emissions reductions in LDCs, reducing their own
mitigation costs while providing a stream of finance and technology for LDCs.32 Such payments are essential
if minimising the global costs of mitigation is to go hand in hand with an equitable distribution of those
costs.33 The payments can be generated through agreements and mechanisms such as the Clean
Development Mechanism, Reduced Emissions from Deforestation and Forest Degradation and the proposed
Copenhagen Green Fund. Some of the burden to high-income countries will also be carried in the form of
higher prices for imports from developing countries of high-carbon-content products (which should be
subject to carbon pricing or taxation in the developing countries themselves, so that they benefit from the
resultant revenue) and their low-carbon replacements (which are likely to be more expensive initially than
high-carbon ones, in the absence of carbon pricing).
Some policy-makers have argued that a uniform global carbon price would entail much larger payments
than necessary to those providing cheap mitigation opportunities. They have, in effect, argued for price
discrimination, paying only just enough to get the mitigation done; that way, a given amount of climate-
policy expenditure can be leveraged to have a bigger environmental effect. But the implication is that the
carbon price implicit in various financing arrangements of potential benefit to LDCs would be lower than
elsewhere (for example, the EU Emissions Trading System), reducing the funds available to LDCs. There are
major dangers in this approach, in particular, the danger that the carbon price at the abatement margin that
is implicit in separate agreements for REDD or specific industries will not be high enough to achieve enough
mitigation particularly if it turns out that some supposed negative-cost options are in fact costly, because
of unanticipated transactions and implementation costs.
1SeeDell,JonesandOlken(2008).JonesandOlken(2010)alsofindthathightemperaturesinpoorcountrieshaveanadverse
effectontheirexports,especiallyagriculturalandlightmanufacturingexports.
2 SeeBurgessetal(2009)onIndia.
3 Hallegatteetal(2007).
4 Stern(2007)andIPCC(2007)describemanyofthelikelydevelopmentsandthenonnegligiblerisksofevenworseoutcomes.
5 Richardsonetal(2009).
6WRICAITdatabase,accessed12August2010.Internationalbunkersincluded.Cumulativedataarefortheperiod1850to2006.
LDCscompriseforthispurpose:Afghanistan,Angola,Bangladesh,Benin,Bhutan,BurkinaFaso,Burundi,Cambodia,CapeVerde,
CentralAfricanRepublic,Chad,Comoros,CongoDem.Republic,Djibouti,EquatorialGuinea,Eritrea,Ethiopia,Gambia,Guinea,
GuineaBissau,Haiti,Kiribati,Laos,Lesotho,Liberia,Madagascar,Malawi,Maldives,Mali,Mauritania,Mozambique,Myanmar,
Nepal,Niger,Rwanda,Samoa,SaoTome&Principe,Senegal,SierraLeone,SolomonIslands,Sudan,Tanzania,Togo,Uganda,
Vanuatu,YemenandZambia.
7Sourceasinfootnote6.DataonemissionsfromlandusechangeandforestryarenotavailableformanyindividualLDCs,butthe
differencebetweentotalemissionsperheadforLDCsasagroupandfortheworldasawholeisestimatedtobeverysimilartothe
differenceexcludinglandusechangeandforestry,eventhoughtheseactivities(togetherwithagriculture)aremoreimportantfor
LDCs.
8 Peopledifferaboutwhatwouldbeafairdistributionofthecostsofclimatechangemitigation.Thedegreeofaversionto
inequalityiscrucial.Stern(2007)offeredestimatesofthecostsofclimatechangeusinganassumptionthatimpliesthatpeople
shouldpaybroadlyinproportiontotheirpercapitaconsumptionforclimatechangemitigation.Carbonpricingwithoutincome
transferswouldbeunfairifcarbonintensiveproductssuchasenergyaccountedforalargershareofpoorpeoplesthanofrich
peoplesconsumption.Someeconomists,suchasDasgupta(2008),havearguedthatpolicymakersshouldbemoreaverseto
inequalitythanwasStern,implyingthatlargertransferstopoorpeopleareneededtopayfortheclimatemitigationcoststhey
wouldotherwisebear.
9
SeeBowenetal,2009.Therelationshipdoesnotdisappearathighlevelsofincomepercapitaifproperallowanceismadefor
pasttechnicalprogressandtechnologychoice.Inotherwords,theredoesnotappeartobearobustenvironmentalKuznetsCurve
phenomenonforCO2emissions(seethediscussioninStern,2004).
10
Butcarbonintensityvarieswidelyacrosscountries;in2006,thecarbonintensityofelectricityproductionvariedfrom1842.6
gCO2eperkWhinBotswanato1.4gCO2eperkWhinMozambique.
11
WRICAITdatabaseaccessed4May2010.
12
SeeHardin(1968).
13
Asdocumented,forexample,bytheresearchdiscussedinCollier(2008).Collierstresseshowsuchfactorsinhibitgrowthinmany
LDCs,hometothebottombillion,partlybypreventinggoodgovernance,institutionbuildingandprovisionofpublicgoods.
14
TheOECDandIEAhavedetailedthehighcostsofenergysubsidies(seethediscussioninBurniauxetal,2009).Thesemaybe
motivatedtosomeextentbyconcernsabouttheaccesstoenergybythelesswelloff(theissueofenergypoverty)butitisfar
fromclearthatthepoorarethemainbeneficiaries.Inanycase,directfinancialtransfersandmicroloanstothepoormaybemore
effectiveintacklingpovertyaswellasmoreefficientfromthepointofviewofthestructureoftheeconomy.
15
QuotedinWorldBank(2009).
16
Blanfordetal(2009)andWiseetal(2009)illustrateinaglobalframeworkthedangersofbiofuelproductiondisplacingforests
andfoodproductionindevelopingcountries,severelydistortinggloballanduse,intheabsenceofappropriateclimatechange
mitigationpoliciesinthosecountries.
17
Theseadditionalfundsarewarrantedtomaketheincidenceofmitigationandadaptationcostsfairer;theresponsibilityof
developedcountriesforthelionsshareofpastgreenhousegasemissionsstrengthensthecase.
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