The Economic Impacts of Climate Change in the ECE Region

1. United Nations Economic Commission for Europe The Economic Impacts of Climate Change in the ECE Region Ján Kubiš EXECUTIVE SECRETARY Economic Commission for Europe Dialogue of the Executive Secretaries New York October 2009

2. Today’s Presentation • The effects of climate change in the ECE region • Economic impacts of climate change in the region: adaptation and mitigation • Regional/global efforts and initiatives to address the impacts of climate change • The work of ECE in climate change

3. 1) The effects of climate change in the ECE region

4. Main effects of climate change in the region • Warming in 21st century projected to continue at rate somewhat greater than global mean • Changes in precipitation mean that, in general, wet areas will get wetter, while dry areas become dryer • Higher intensity and frequency of extreme weather events • Sea level rises

5. Observed annual average temperatureGlobal (left) and Europe (right)

6. Main climate change effects in Europe • Annual mean warming in 2080 to 2099 will be between 2.2 to 5.3°C, compared to period 1980 to 1999 • Over same period, annual precipitation (rain, slow, sleet or dew) is projected to increase by up to 16% in northern Europe, especially in winter, but to decrease by between 4 and 27 % in Mediterranean area • Summer droughts and heat waves will be more likely, more intense and longer in central Europe and in Mediterranean, rendering region more vulnerable to water stress and desertification • Snow season will become shorter and snow depth will decrease, although this may not affect coldest peaks of Europe

7. Main climate change effects in Central Asia • Warming over reference period is projected to be 3.7°C, well above global mean • Summer precipitation will drop byup to 13 %, most markedly in the western part of central Asia, while in winter, it will increase around 4 % • Accompanied by increase in frequency of very dry spring, summer and autumn seasons

8. Main climate change effects in North America • At a projected 2 to 3°C, warming in most of NA regions will exceed global mean • Northern regions are expected to be hardest-hit by warming in winter, with projected warming reaching 10°C. Hotter southwest areas will get warmer mainly during summer months. • Precipitation will be around 20 % greater in Canada and northeastern US, but lower in southwest US. Southern Canada will become wetter in winter and spring and drier in summer. • In most of region, snow season will be shorter.

9. 2) The economic impacts of climate change in the ECE region

10. Main climate change impacts across region • Climate change in ECE region will have impact on access to water resources, food and security, ecosystems, human health and settlements/society • Extreme weather events, especially increased risks of inland flash floods and coastal flooding and increased erosion would have economy-wide effects • Heat waves and more wildfires will increase health risks • Mountainous areas will face reduced snow cover with implications for winter tourism and extensive species loss • In southern Europe, warming will reduce water availability, hydropower potential, summer tourism and crop productivity • There are clear links between climate change and secondary and tertiary economic sectors such as housing, transport and other infrastructure, insurance and financial services

11. Impacts on water resources • Water availability will rise in higher latitude regions where rainfall is higher • Greater water scarcity in hotter areas due to reduced rainfall and loss of snow meltwater • In Southern Europe, summer water availability could drop 30% at 2°C warming • West Coast of USA could experience more erratic water supply • Water shortages will increase investment required in infrastructure, reduce agricultural output and increase infrastructure damage from subsidence. Negative implication for hydropower potential.

12. Impacts on food and security • Higher latitudes – Canada, Russia and N. Europe – could initially see increase in crop yield but this is expected to be short-lived due to crop tolerance threshold • In lower latitude regions – Southern Europe, Western USA – greater water stress will lead to substantial declines in crop yields

13. Economic Impacts on the ECE Region Are Moderate Compared to Other Regions

14. GHG emissions in the ECE region • ECE region currently accounts for 49.5% of global GHG emissions and 50.8% of global GDP (PPP) • On per capita basis: • North America - 3 times world average • EU and Russia – 1.5 times world average • Measurable progress has been made in reducing emissions under UNFCCC

15. GHG abatement potential • Abatement potential varies considerably across region, due to: • Sectoral split of economy • Carbon intensity starting point of sector in country • Country’s economic growth

16. GHG emissions associated with GDP per capita – large variation across the region

17. Huge potential to reduce GHG emissions in region • ECE region’s abatement potential up to 2030 approximately 10.2 GtCO2e per year • Represents approximately -45 to -55% vs. 2030 business-as-usual (BAU) or -35 to -45% vs. 2005 • Abatement potential mainly in energy efficiency, low-carbon energy supply, terrestrial carbon (agriculture, forestry), technology, behavioural change

18. Costs of reducing GHG emissions in the region • Global GHG Abatement Cost Curve v2.0 (by McKinsey) shows the abatement cost in EUR per tCO2e beyond BAU • Shows highest potential in building sector (lighting, electronics, insulation retrofit), transport sector (motor systems efficiency), waste recycling and electricity from landfills, all highly relevant areas for the ECE region.

19. 3) Regional efforts and initiatives to address the impacts of climate change in the ECE region

20. The ECE Region and the UN Efforts to Reduce Emissions • Europe has led the global effort to control GHG emissions • 30 of the 31 countries that committed to emission reductions under the Kyoto Protocol of the UNFCCC, i.e. Annex I countries, are ECE economies

21. Other initiatives to cut GHG emissions • European Union: • EU cap and trade: Emission Trading System (EU ETS) • 2nd phase (2008 – 2012) covers 10,000 installations, 50% of EU’s CO2 emissions • Largest existing carbon market • 3rd phase (2012 – 2020): heavy industry will contribute significantly to overall target of cutting GHGs, no more free permits • EU Directive 20x20x20 • 20% reduction in GHG emissions • 20% increase in efficiency • 20% share for renewables • EU Directive on energy performance of buildings • The US: • Energy Independence & Security Act (2007): Mandated increases in product efficiency, biofuels, R&D • One-half of US states have implemented some mandate requiring a percentage of electricity to be produced by renewables • Waxman-Markey legislation: Sets up a cap-and-trade system • Russia: • Proposes to increase renewable energy production from 1% to 4.5% by 2020

22. Regional Coordination Mechanism • Under RCM, thematic working group on climate change established to: • Design a regional action plan on climate change adaptation and mitigation • Prepare a system-wide regional road map for the implementation of COP-15 outcome • Coordinate and exchange information on financing, adaptation/mitigation, advocacy work

23. Regional climate change compendium • UNECE has compiled a regional climate change compendium, with inputs by all RCM members • This lists all organisations’ climate change activities, distinguishing between mitigation, adaptation and cross-cutting issues

24. 4) The work of ECE in support of climate change action

25. ECE Activities Addressing Climate Change – Reducing GHG emissions • ECE World Forum for Harmonization of Vehicle Regulations possible strategy for GHG abatement in automotive sector through: • improved energy efficiency and use of sustainable biofuels • supporting market of plug-in hybrid vehicles • electric vehicles in longer run (2025–2040). • Currently developing market fuel quality standards, thus enabling vehicles to use fuels that minimize vehicle emission levels • Integrated transport emissions mitigation, including eco-driving, better transport infrastructure, including traffic management systems, to foster the development of intelligent transport systems and their implementation in all transport modes and infrastructure • Ad Hoc Group of Experts on Coal Mine Methane (CMM) promotes recovery and use of methane gas from coal mines to minimize GHG emissions • Ad Hoc Group of Experts on Cleaner Electricity Production from Coal and other Fossil Fuels reviews prospects for cleaner electricity production from fossil fuels and measures or incentives to promote investment in cleaner electricity production. • 1979 ECE Convention on Long-range Transboundary Air Pollution (LRTAP) and its 1999 Gothenburg Protocol aim to cut emissions of air pollutants, inter alia sulphur dioxide (SO2), nitrogen oxides (NOx) and non-methane volatile organic compounds (NMVOCs), which have direct or indirect impact on global warming

26. ECE Activities Addressing Climate Change - Mitigation • Promoting energy efficiency • ECE Energy Efficiency 21 (EE21) programme to enhance countries’ energy efficiency and reduce GHG emissions through more efficient production, conservation and use of all energy sources • Global Energy Efficiency 21 Project (GEE21) transfers experience of ECE energy efficiency projects to other regions. Aims to identify needs, obstacles and best practices for the formation of an energy efficiency market • Programme to achieve maximal energy efficiency in region’s housing • Land use, land use change and sustainable forests • Project to strengthen sustainable biomass supply, based on agro- and wood residues, from selected countries in the UNECE region to energy producers in the EU. Focus on enterprise development and innovation

27. ECE Activities Addressing Climate Change - Adaptation • Supporting design and implementation of adaptation strategies • Public-private partnerships in infrastructure for climate change adaptation • Integrated water resource management • UNECE Convention on the Protection and Use of Transboundary Watercourses and International Lakes (Water Convention) and its Protocol on Water and Health establish joint or coordinated surveillance and early-warning systems, contingency plans and response capacities, as well as mutual assistance to respond to outbreaks or incidents of water-related disease, especially those arising from extreme weather events • Based on integrated water resources management, the Guidance on water and adaptation to climate change provides advice on how to assess impacts of climate change on water quantity and quality, how to perform risk assessment, including health risk assessment, how to gauge vulnerability, and how to design and implement appropriate adaptation measures

28. ECE Activities Addressing Climate Change – cross-cutting issues • Strengthening institutions and processes for regional environmental governance and for national mitigation plans and adaptation strategies • UNECE Convention on Environmental Impact Assessment in a Transboundary Context (Espoo Convention) and its Protocol on Strategic Environment Assessment (SEA), not yet in force, will ensure that Parties integrate consideration of environment into their plans and programmes at very early planning stage. SEA will be used to introduce climate change considerations into development planning. • Financing climate change mitigation and adaptation and boosting technology transfer • Financing Energy Efficiency Investments for Climate Change Mitigation project, with budget of ca. US$ 7.5m, to promote investment climate in which self-sustaining energy efficiency and renewable energy projects can be identified, developed, financed and implemented by local municipalities, factories or energy utilities. Participating countries: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Kazakhstan, Rep. of Moldova, Romania, Russian Federation, Serbia, the former Yugoslav Rep. of Macedonia, and Ukraine.

29. ECE Activities Addressing Climate Change – cross-cutting issues • Advocacy and access to information • UNECE Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (Aarhus Convention) and its Protocol on Pollutant Release and Transfer Registers (PRTRs) constitutes the only legally binding instrument to implement principle 10 of Rio Declaration, which provides for participation of citizens in environmental issues by giving them appropriate access to the information concerning the environment held by public authorities, including access to judicial or administrative proceedings, redress and remedy. Access to scientifically based information and public participation in decision-making on environmental issues are widely recognized as an important foundation for climate change action. • Strategy for Education for Sustainable Development integrates key themes of sustainable development, including climate change, into all education systems. ESD offers an essential way to shape knowledge and attitudes. • Environment Performance Reviews: these include chapters on climate change or related issues which provide a comprehensive analysis of instruments used in the context of regional climate change mitigation and adaptation efforts, and a means to offer important policy recommendations. • The Transport Health and Environment Pan-European Programme (THE PEP), a joint project of ECE and the World Health Organization Regional Office for Europe, aims to achieve more sustainable transport patterns and a better reflection of environmental and health concerns in transport policy. In particular, THE PEP also promotes sustainable urban transport, including alternative modes of transport.

30. ECE Activities Addressing Climate Change – cross-cutting issues • Monitoring, evaluation and analysis • Reviewing possibility of upgrading statistical work based on UNFCCC guidelines on compilation of emission inventories and UN Committee of Experts on Environmental-Economic Accounting (UNCEEA) to ensure that statistics on emissions become part of regular production and dissemination process of official national statistics. • European Monitoring and Evaluation Programme (EMEP) under LRTAP Convention monitors and models air quality, and is involved in reporting and estimating emissions. International working groups provide long-term monitoring of data that can identify changes that might be associated with a changing climate. EMEP is also responsible for integrated assessment modelling work to analyse environmental effects and to calculate the necessary emission abatement and related costs. In this way, cost-effective pollution control strategies can achieve the desired environmental targets at least cost. Recent use of Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS) integrated assessment model, developed by the Convention’s Centre for Integrated Assessment Modelling, has explored synergies and trade-offs between emissions of air pollutants.

31. ECE Activities Addressing Climate Change – cross-cutting issues • Monitoring, evaluation and analysis • Monitoring and analysis of forestry-related indicators, and promoting policy forums on climate change in the forest sector, as part of its work to promote sustainable forest management. Collects basic data on forest resource assessment (e.g. carbon sequestration and storage in forests) and the production of and trade in forest products (e.g. harvested wood products, substitution by wood of other, more carbon-intensive materials). It contributes to policy monitoring by reporting on qualitative indicators of sustainable forest management and by publishing a chapter in the Forest Products Annual Market Review on policies, which in recent years has included a comprehensive update on climate change policies affecting the forest sector. • ECE World Forum for Harmonization of Vehicle Regulations (WP.29) working group developing worldwide harmonized light vehicle emission test procedures