Chapter 3: Climate Change.

This chapter analyses the policy implications of the climate change challenge. Are emission reduction pledges made in Copenhagen/Cancun enough to the climate and limit global average temperature increase to 2 oC? If not, will the consequences be? What alternative growth pathways could stabilise global average atmospheric concentration of greenhouse gases (GHG) at 450 ppm, the level which has a 50% chance of keeping the temperature rise to 2 oC? policies are needed, and what will be the costs and benefits to the economy? can the world adapt to the warming that is already occurring? To shed light on questions, this chapter first looks at trends to 2050 in GHG concentration and (including from land use), temperature and precipitation under the Outlook Baseline scenario of “business-as-usual” (i.e. no new ). It then takes stock of the state of climate policy today. Most countries use a of policy instruments, including carbon pricing (carbon taxes, cap-and-trade trading, fossil fuel subsidy reform), other energy efficiency policies, -based approaches and innovation policies to foster clean technology. chapter then looks at what further action is needed by comparing different scenarios against the Baseline. These include various scenarios to GHG concentrations at 450 ppm and 550 ppm using different technology , e.g. carbon capture and storage, phasing out nuclear power, and increasing use of biofuels; linking carbon markets; and various emissions permit allocation . The chapter concludes by outlining how limiting global warming will require policies to reconcile short-term action with long-term climate , balancing their costs and benefits. Timely adaptation policies to limit by the already changing climate will also be essential.