Economics of Climate Change: Context and Concepts Related to Mitigation
"Climate change is increasingly seen as not only an environmental issue, but a deeply economic one. ‘Climate change presents a unique challenge for economics: it is the greatest and widest ranging market failure ever seen’. Markets are failing to put a price on the emissions of greenhouse gases, passing the costs on to society as a whole. In short, climate change mitigation poses significant challenges for South Africa and its energy development, historically highly energy-intensive. At the same time, the country faces a host of daunting development challenges, exacerbated by the legacy of apartheid. In the short term, improved energy efficiency is the obvious first solution – saving energy, putting money back in the pockets of consumers and companies and contributing to a better environment. The longer-term changes required notably include changing the fuel mix and making a transition to a low-carbon economy. Examining both challenges, the papers in this series consider how alternative conceptions of a development path can be achieved. In the short-term, energy efficiency provides large potential for mitigation – and energy savings at the same time. Changing South Africa’s fuel mix, dependent to three quarters on coal, is at least a medium-term challenge. The minerals-energy complex is so central to the economy that it is likely to take decades to change dramatically. The most transformative change is to a change in economic structure, likely to take long to achieve."