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The definition of ancillary impacts is given in Section 7.2.2.3. As noted there, these can be positive as well as negative. It is important to recognize that gross and net mitigation costs cannot be established as a simple summation of positive and negative impacts, because the latter are interlinked in a very complex way. Climate change mitigation costs (gross and well as net costs) are only valid in relation to a comprehensive specific scenario and policy assumption structure.
An example is transportation sector options that have an impact on both GHG emissions and urban air pollution control programmes. GHG emission control policies, like vehicle maintenance programmes, reduce both GHG emissions and other pollution, but another option, like the introduction of diesel trucks as a substitute for gasoline trucks, decreases GHG emissions but increases NOx emissions and thereby local air pollution. The gross and net costs assessed for these programmes depend on specific baseline and policy case scenarios (specifically, the assumptions on urban air pollution control policies are critical).
It is important that assumptions about environmental control policies outside the specific area of GHG emissions reduction be carefully specified in relation to the baseline as well as to the policy case. If the baseline assumes that some environmental control policies are implemented in the time frame considered, the side effects of the GHG reduction policy in relation to these areas cover part of these environmental policy objectives. The mitigation costs then eventually offset part of the control cost in the baseline case. However, if the baseline case includes specific flue-gas cleaning systems on power plants to control SO2 and NOx emissions that are already installed, then investments in these plants are irreversible. In this case, the joint benefit of climate change mitigation programmes in the form of avoided control cost on the other emissions is low, while the public health ancillary benefits may be substantial (see also the discussion on ancillary and/or co-benefits in Section 7.2.2).
Assumptions about technological development and efficiency in the baseline and mitigation scenarios have a major impact on mitigation costs, in particular in bottom-up mitigation cost studies. Many of these studies structure the cost assessment around an estimation of the costs and other impacts of introducing technological options that imply lower GHG emissions. The existence and magnitude of a potential for technological efficiency improvements depends on expectations about technology innovation and penetration rates given consumer behaviour and relative prices. These assumptions are discussed in more detail in Section 7.3.4.
A number of cost studies assessed different parts of the three above-mentioned side effects. The double dividend is assessed predominantly in macroeconomic studies on the basis of fairly detailed modelling representation of tax systems and specific labour market constraints that cover the short-to-medium term time horizon. Joint environmental impacts of climate change mitigation policies are examined in various studies, including macroeconomic studies, sectoral studies, and technology-specific engineering studies. Impacts of technological development and efficiency are basically addressed in all sorts of studies, sometimes explicitly but sometimes implicitly. The lack of an integrated treatment of all three issues is, inter alia, a consequence of the different approaches to the technology characterisation in top-down models (macroeconomic) and bottom-up models (technology- or policy-specific models), which are further explained and discussed in Section 7.6. A few studies exist, however, that attempt such an integration (see, e.g., Walz, 1999).
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