Taniguchi ( Japan ) Sector Costs and Ancillary Benefits of Mitigation 9

References 595 CONTENTS Policies adopted to mitigate global warming will have implications for specific sectors, such as the coal industry, the oil and gas industry, electricity, manufacturing, transportation and households. A sectoral assessment helps to put the costs in perspective , to identify the potential losers, and the extent and location of the losses, as well as to identify the sectors that may benefit. However, it is worth noting that the available literature to make this assessment is limited: there are few comprehensive studies of the sectoral effects of mitigation, compared with those on the macro gross domestic product (GDP) effects, and they tend to be for Annex B countries and regions. There is a fundamental problem for mitigation policies. It is well established that, compared to the situation for potential gainers, the potential sectoral losers are easier to identify, and their losses are likely to be more immediate, more concentrated , and more certain. The potential sectoral gainers (apart from the renewables sector and perhaps the natural gas sector) can only expect a small, diffused, and rather uncertain gain, spread over a long period. Indeed many of those who may gain do not exist, being future generations and industries yet to develop. It is also well established that the overall effects on GDP of mitigation policies and measures, whether positive or negative, conceal large differences between sectors. In general, the energy intensity and the carbon intensity of the economies will decline. The coal and perhaps the oil industries are expected to lose substantial proportions of output relative to those in the reference scenarios, but other sectors may increase their outputs yet by much smaller proportions. Energy-intensive sectors , such as heavy chemicals, iron and steel, and mineral products , will face higher costs, accelerated technical or organizational change, or loss of output (again relative to the reference scenario) depending on their energy use and the policies adopted for mitigation. Other industries, including renewables and services, can be expected to benefit in the long term from the availability of financial and other resources that would otherwise have been taken up in fossil fuel production. They may also benefit from reductions in tax burdens, if taxes are used for mitigation, and the revenues recycled as reductions in employer or corporate or other taxes. Within this broad picture, certain sectors will be substantially affected by mitigation. The coal industry, producing the most …