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Migration and Global Environmental Change

DR15: The impact of low-carbon policy on migration Michael Reilly and Yasmin Hossain Government Office for Science, London, UK October 2011

This review has been commissioned as part of the UK Governments Foresight Project, Migration and Global Environmental Change. The views expressed do not represent the policy of any Government or organisation.

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Contents

Abstract...........................................................................................................................3 Introduction ....................................................................................................................5 The science of climate change ..................................................................................... 5 Relevant theories of mobility and displacement......................................................... 6 Current and projected greenhouse gas emissions..................................................... 8 Current emissions........................................................................................................... 8 Future emissions .......................................................................................................... 10 Opportunities to abate future greenhouse gas emissions....................................... 11 Energy efficiency .......................................................................................................... 12 Low-carbon energy supply............................................................................................ 13 Forestry and agriculture................................................................................................ 19 Low-carbon cities.......................................................................................................... 20 The macroeconomic impacts of mitigation ............................................................... 21 Low-carbon jobs .......................................................................................................... 25 Low-carbon policy and migration............................................................................... 27 Renewable energy and rural development ................................................................ 33 Conclusion: plausible scenarios for the impact of low-carbon policy on migration ....................................................................................................................................... 34 References .................................................................................................................... 35

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Abstract
The paucity of evidence on the impact of current mitigation policy on migration and the uncertainty surrounding future policy is highly problematic for projecting outcomes, both temporally and geographically. Nevertheless, low carbon policies could have effects on population mobility and displacement by changing the net expected income differentials between areas of origin and destination, disrupting the livelihoods of households reliant on natural resources, modifying direct transport costs and altering returns to human capital. The global economic costs of greenhouse gas abatement are highly uncertain, but they will not be uniform across either countries or sectors. For all but the most pessimistic cost estimates, aggregate mitigation costs should be absorbed by future global economic growth, but there still exists some potential for regulatory arbitrage within sectors. Emissions-intensive firms open to international trade could cross borders in the absence of regional agreements. Renewable energy production is more labour intensive than fossil fuel production in manufacturing and operational terms, although this is likely to lessen in the long term as efficiency gains bring down costs. Direct employment in the energy sector is relatively small compared with other sectors, and it is male dominated. Most new recruitment would be sourced from the existing workforce. If the USA is typical of developed countries, then relatively few low-carbon jobs may be low skilled. The largest source of low-carbon jobs for the low skilled in the developing world is likely to be in labour-intensive biofuel harvesting. Ineffective international governance of climate change would exacerbate the unequal distribution of costs across countries and sectors, and as these costs accumulate with inaction and climate damages rise, belated policy could result in volatile changes in net expected income differentials between countries, livelihood losses from socioecological systems and direct transport costs. Ambitious targets for large-scale hydropower and biomass production could result in internal displacement. New biomass markets also offer direct opportunities for smallholders and households to diversify income; however, they could present indirect threats if production has a disruptive effect on livelihoods by diminishing the quantity and quality of local ecosystem services or if higher food prices increase food insecurity. The growth expected in biomass production would be expected to have an impact on households who are dependent on forests for their livelihoods, especially if a lack of rights renders them vulnerable to access restrictions. The Clean Development Mechanism (CDM), Reducing Emissions from Deforestation and Degradation (REDD+) and the green climate fund should improve the criteria for sustainable development objectives of approved projects so that vulnerable people are protected from both physical and livelihood displacement. Energy efficiency gains, the multilateral removal of fossil fuel-energy subsidies and investment in clean energy technologies have the potential to change expected net income differentials in migration corridors. The precise impact of direct transport costs on mobility will vary among migrants, but given that average costs to 2030 are expected to be high, it would probably have a

DR15 4 dampening effect on movement. Low-carbon urbanisation in developing countries is a significant cross-sectoral opportunity, but achieving low-emission building, public transport and waste management is capital intensive. While highdensity, compact cities may have lower costs of living and a higher quality of life for residents, low-income ruralurban migrants may be excluded from these benefits. Low-carbon policies have the opportunity to improve the access of rural areas in the developing world to energy, which could have a highly significant impact on mobility. Stand-alone renewable technologies and micro-grids can be competitive in rural areas and their effective deployment (including through the CDM) is likely to boost rural incomes and be a pull factor at areas of origin. Beyond the short term, with increased income the economic costs of mobility may be less prohibitive, and these movements would be part of a pathway to development and not environmentally induced mobility with operational or geopolitical difficulties. The precise impacts of existing mitigation policy on migration are often difficult to distinguish, and more empirical research is urgently required in this area. Nevertheless, the impact on mobility in the short to medium term is likely to be modest with some new direct employment opportunities for a range of skills and the potential for low-income smallholders and households to diversify income. In the longer term, if the transition to a low-carbon society induces a new wave of innovation, the impact on labour markets could be transformative The sheer size of the developing-world population dependent on agriculture and forestry raises concerns that poorly designed and implemented policies to increase low-carbon energy supply and improve carbon sequestration could, paradoxically, harm the livelihoods that mitigation policy is intended to protect. If low-carbon policies are crafted systemically at appropriate levels of governance and in accordance with other strategic objectives such as sustainable development, energy access, poverty reduction, adaptation to climate change, and maintaining ecosystem services and biodiversity, the outcomes of greenhouse gas abatement are more likely to be beneficial in the short, medium and long term.

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Introduction
The transition to low-carbon societies will require socioeconomic changes that are unlikely to be successful without support from a portfolio of national and international policies. Although the implications for migration from climate change have been explored in recent research, there is much less analysis on how mitigation may influence human mobility and displacement. This paper reviews the main low-carbon technologies and policies that have been proposed to mitigate greenhouse gas emissions and considers their implications for human migration particularly, although not exclusively, in the context of environmental change. In the section The science of climate change, a brief overview of climate-change science is provided to illustrate the scale of the challenge. Theory and evidence on rural to urban migration, displacement and environmentally induced migration is highlighted in the Relevant theories of mobility and displacement section to identify key variables of interest. In the Current and projected greenhouse gas emissions section, current greenhouse gas emissions for sectors and regions are summarised and future projections discussed. The technical and economic potential of opportunities to abate greenhouse gas emissions are examined in the Opportunities to abate future greenhouse gas emissions section with particular reference to their geography. The macroeconomic implications of mitigation are explored in the sixth section, The macroeconomic impacts of mitigation, and the prospects for employment in the seventh, Low-carbon jobs. Finally, the possible impacts of mitigation policy on migration are drawn out in the section Low-carbon policy and migration, and this analysis is augmented in the final section, Renewable energy and rural development, with some reflections on the role of renewable energy in rural development. The considerable uncertainty surrounding future low-carbon policy in the medium to long term limits the bulk of this analysis to a horizon of 2030.

The science of climate change

There is strong evidence that global warming over the last half century has been caused largely by human activity (Royal Society, 2010). In order to balance the energy that the Earth absorbs directly from the sun, its surface and atmosphere emit infrared energy into space. In addition to the energy that the Earth absorbs directly from the sun, it also receives infrared energy that is at first emitted from its surface but then reflected back from its atmosphere. The warming caused by this additional infrared energy is called the greenhouse effect. An increase in the global atmospheric concentrations of gases such as carbon dioxide (CO2), methane (CH4) and nitrous oxide (NO2) intensifies the greenhouse effect and causes a positive radiative or climate forcing. It is extremely likely that the marked increase in the global atmospheric concentration of greenhouse gases since the industrial revolution has been as a result of human activities such as the burning of fossil fuels for energy, agriculture and deforestation (Solomon et al., 2007). Such activities have been strongly associated with historical pathways of human development.

DR15 6 The Intergovernmental Panel on Climate Change (IPCC) has estimated that if greenhouse gas emissions continue unabated, the globally averaged surface temperature would be 2.54.7C higher by 2100 compared with pre-industrial levels (Solomon et al., 2007). The potential for adverse, geographically uneven impacts from this change in climate have been well documented and consensus has emerged among a coalition of nation states that policies should be developed to limit this increase to 2C (Stern, 2006; Parry et al., 2007; UNFCCC, 2010). Although there are uncertainties surrounding the sensitivity of the climate to increases in greenhouse gas concentrations, the stabilisation target to achieve this goal with a 50% probability is around 450 parts per million (ppm) of CO2 equivalent (CO2e). The scale of the challenge, then, is stark given that the current concentration is already above 400 ppm and CO2 emissions were growing at an accelerating rate at the beginning of the century (Raupach et al., 2007; EEA, 2010).

Relevant theories of mobility and displacement

There are many theories of migration, but in view of the scope of this paper, this section will focus on rural to urban migration, displacement by development projects and the relationship between migration and environmental change Harris and Todaro (1970) developed a model to describe rural to urban internal migration in developing countries that introduced the concept of 'push' and 'pull' forces and has been corroborated by some empirical evidence. They found that the migration decision was based principally on an individual's maximisation of expected financial benefits, and this suggested a framework for behaviour where expected economic benefits (including remittances) are compared with costs. According to this model, rural to urban migration proceeded mostly in response to differences in expected rural and urban real incomes. It also explained the paradox of why increasing rates of rural to urban migration are possible even with ever-higher levels of urban unemployment. The New Economics of Labour Migration Theory went further and suggested that the migration decision is made at the household level (Stark and Bloom, 1985). The rural household provides costs in exchange for insurance against adverse environmental conditions. In this way, an informal agreement exists between the individual and the household reinforced by kin altruism and inheritance motives. This theory is particularly relevant to rural areas in leastdeveloped countries where risk is more widely distributed. Remittances, for example, may improve productivity in the area of origin through increased liquidity despite loss of labour. The Human Capital Theory posits that migration is highly selective and that migrants will tend to be those individuals for whom the expected financial benefits are highest and migration costs are lowest (Taylor and Martin, 2001). The pull of agglomeration in prosperous places where people with skills cluster

DR15 7 and human capital earns higher returns where it is plentiful is also strong (World Bank, 2009). Historical, social and cultural connections between areas of origin and areas of destination also have an influence on mobility. For example, more than half of all international migrations occur between countries that share a common language (World Bank, 2009). In an analysis of movements between Mexico and the USA, Massey et al. (1994) found that an accumulation of social capital eventually makes mobility more attractive and accessible to communities by lowering the costs of migration. Human displacement is associated with many large-scale development projects. In its narrowest sense, displacement refers simply to physical displacement or the geographic relocation of people from their homes to another locale. New models for displacement and resettlement give further consideration to the economic dislocation and social exclusion that communities experience when they are deprived of the land and resources that are integral to their means of production (Cernea, 2000). In 1990, the IPCC suggested that the greatest single impact of climate change could be on human migration, but evidence suggests that environmental change is rarely the sole cause of migration (Perch-Nielsen et al., 2008; Tacoli, 2009). Categorisations of environmentally induced migration reflect the complexity of the relationship, and Bates (2002) has described a continuum stretching from mobility to displacement. In some research there is evidence of an effect, although correlating migration with environmental change requires care, and findings at first glance can seem contradictory. Mass migration in the Horn of Africa had been attributed to environmental degradation, but it was disruption to long-standing traditional resource management systems for coping with spatial and temporal variability by conflict and scorched-earth government policies that forced displacement from increasingly insecure areas (Kibreab, 1997). Migration is already an established coping response to seasonal variation in rainfall, but drought conditions can intensify existing migration patterns and if methods to manage risk fail, outcomes can be less predictable. A study of the drought conditions experienced by mostly sedentary farmers in northern Nigeria from 1972 to 1974 found that such migrations tended to cover greater distances, lasted for longer periods and that there was an increase in the prevalence of urban migrations (Morrissey, 2009). On the other hand, evidence from the 1983 5 drought in Mali found that migration was over shorter distances, shorter term and predominantly cyclical in nature (Findlay, 1994). Household capital endowments both human and financial were found to be important in determining the migratory response. For the dust-bowl migration in the USA from Oklahoma to California, distances were longer and migration was more permanent because established coping responses failed (McLeman and Smit, 2006). Again, household capital endowments were important in determining the migratory response: poor land tenure, social networks extending to California and an ability to finance the costs and to work with cotton crops made migration more likely. Costly migration may be a less likely response to environmental change because of the impoverishing effect it can have on poorer households. In Burkina Faso, it was found that although land degradation was more strongly

DR15 8 correlated with migration than episodic unfavourable climatic conditions, people living in highly degraded areas migrated less than people living in less degraded areas (Henry et al., 2004).Thus, an inability to invest in migration may have limited migration. The paucity of evidence on the impact of current mitigation policy on migration and the uncertainty surrounding future policy are highly problematic to projecting outcomes both temporally and geographically. Any effects, moreover, will not act in isolation but will be part of a wider and more complex mix of determinants. Nevertheless, existing theory and the limited evidence on environmentally induced migration do point to key variables of interest. This review will therefore concentrate on ways in which mitigation policy could affect net expected income differentials between areas of origin and destination, the returns to human capital, direct transport costs and the livelihoods of households reliant on natural resources.

Current and projected greenhouse gas emissions

Current emissions
Global greenhouse gas emissions were approximately 49 GtCO2e in 2007 1 , with fossil fuel energy supply accounting for around two-thirds of emissions (see Figure 1). The power generation sector is the major source of CO2 emissions and provides electricity and heat for buildings and industry. Road transportation and industry-based manufacturing processes are also significant sources of CO2 emissions, with the remainder generated by land-use change, mostly from deforestation. The other main greenhouse gases (CH4 and NO2) are by-products of agricultural processes such as livestock production and fertiliser application.

Figure calculated using World Resources Institute CAIT tool. Greenhouse gas emissions from land-use change are difficult to estimate and are not included in many country totals.

DR15 9 Figure 1: Global greenhouse gas emissions by sector (%).

Source: Baumert et al. (2004).

The geographical distribution of emissions varies by amount and sector. Most greenhouse gas emissions come from just a few countries China, the USA, the European Union (EU), Brazil, Indonesia, the Former Soviet Union and India are most prominent. The developed world currently emits slightly more than the developing world but the sources of the emissions vary and reflect structural differences in their economies (Figure 2). In high-income countries, the power and transport sectors are the most significant emitters, whereas in middleincome countries the contribution from transportation is much smaller and that of land-use change and agriculture is much higher. Low-income countries are responsible for a very small proportion of global emissions, which are predominantly from land-use change, forestry and agriculture.

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Figure 2: Global greenhouse gas emissions by sector and income groups (%).

Source: World Bank (2010). Note: The size of each pie represents relative greenhouse gas contributions from high-, middle- and low-income countries.

Future emissions
The drivers of CO2 emissions growth can be partly understood by expressing emissions in the form of the so-called Kaya identity (Kaya, 1990): CO 2 = GDP CO 2 Energy * Population * * Population Energy GDP

The main determinants of CO2 emissions growth are income and population growth, energy mix and energy intensity. The energy mix and energy intensity of a national economy will vary depending on a number of factors including its economic structure, technology, climate, the spatial distribution of its population and its endowment of natural resources. The increasing growth rate in CO2 emissions observed in the previous decade has been attributed to increasing incomes and populations, and a slowing of progress in altering the energy mix and improving the energy intensity of economies (Raupach et al., 2007). In the absence of mitigation policies, global greenhouse gas emissions are projected to increase 4070% in 2030 (van Vuuren et al., 2009). Energy-related emissions rise to 7080% of total emissions while the proportion of emissions from land-use change declines as limits are reached in deforestation (Figure 3). The strongest relative growth in emissions comes from industry and buildings, including indirect emissions from energy supply, followed by transportation and agriculture. Cities consume most of the worlds energy and urbanisation in developing countries is expected to drive future national emissions growth (World Bank, 2009). However, as loci of income, knowledge capital and innovation, cities can be particularly energy- and emission-efficient spaces for human agglomeration (Glaeser and Kahn, 2010).

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Figure 3: Baseline emissions to 2030 from an ensemble of models (GtCO2e).

Source: van Vuuren et al. (2009).

The share of emissions from developing countries is projected to rise, with China overtaking the USA as the largest emitter in absolute terms if not on a per-capita basis. Strong growth in emissions is also projected from India, Mexico, Africa and Brazil, but national projections are marked by uncertainty (Baumert et al., 2004).

Opportunities to abate future greenhouse gas emissions

The main opportunities to abate greenhouse gas emissions and thereby stabilise concentration focus on altering the energy mix and carbon intensity of economies, and improving the management of forestry and agriculture systems. Pacala and Socolow (2004) conceptualise abatement through stabilisation wedges using existing technologies that modify the business-as-usual trajectory of yearly emissions. The economic potential of most opportunities is dependent on the future price of carbon, but there is consensus on the main categories of abatement opportunities (Stern, 2006; Barker et al., 2007; Nauclar and Enkvist, 2009). For example, recent analysis from Nauclar and Enkvist (2009) suggests that based on a carbon price of 60/tCO2e, technical measures to improve energy efficiency, the switch to a low-carbon energy supply and better management of natural carbon sinks could abate 38 GtCO2e per year by 2030 (see Figure 4). Further technical measures and behavioural change could reduce emissions by as much as 70% in 2030.

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Figure 4: Major categories of abatement opportunities depending for a carbon price of less than 60/tCO2e and 60100/tCO2e (GtCO2e per year).

Source: Nauclar and Enkvist (2009).

Energy efficiency
Improving energy efficiency means lowering the proportion of energy that is used to produce a given output. Many potential opportunities have been identified for capital stock used in energy supply, building, industry and transportation, but fully realising gains will require the removal of fossil fuel subsidies, regulation and investment in skills and technology. Improving energy efficiency is likely to represent the most cost-effective policy option to mitigate CO2 emissions. Moreover, some opportunities are no regrets options, which are economically viable without the pricing of carbon. Developed countries have significantly improved their energy efficiency since the oil crisis in the early 1970s and the opportunity in developing countries not yet locked in to carbon-intensive capital stock is likely to be greater (World Bank, 2009). China has been remarkably successful since the 1980s in lowering the energy intensity of its growing economy through energy efficiency policies (Sinton et al., 1998). There will be wider macroeconomic impacts of energy efficiency if savings are redirected into investment. Economic models suggest that consumers and businesses redirect their savings from energy costs into more productive and labour-intensive parts of the economy, resulting in additional economic growth and employment (Geller and Attali, 2005). On the other hand, there is the risk that an increase in energy efficiency could have a much lesser impact on ameliorating energy intensity because of a rebound effect in consumption by households and businesses. The risk is considered very low to moderate, and is

DR15 13 likely to vary between sectors, technologies and income groups (Greening et al., 2000; Sorrell, 2007).

Low-carbon energy supply

Stabilising greenhouse gas concentrations at a level to limit global warming to 2C will not be possible without a radical change in the energy mix of the global economy. Moving to a low-carbon energy supply will require fuel switching from coal to natural gas, renewable energy technologies for electricity production, carbon capture and storage (CCS), and a reduction in the proportion of fossil fuel used for transportation. There is no single solution for a low-carbon supply of energy, although concentrated solar power has enormous global potential (see Table 1). Of current renewable energy technologies, only hydropower, nuclear and biomass are both technically and economically viable compared with coal-based electricity generation, but higher carbon prices and technological innovation will increase the options for regional and domestic energy systems. Technologies have been deployed in developing countries since the 1970s at a variety of scales and there are many examples of projects that have successfully attained development objectives (Martinot et al., 2002). A scenario to achieve stabilisation of greenhouse gas concentrations at 450 ppm projects dramatic increases in renewable energy demand in many regions (see Figure 5), which will transform the geography of the energy system and its labour market.

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Table 1: Estimated cost ($/kilowatt-hour) and potential (annually averaged terawatts) of renewable energy technologies. Source Estimated cost Estimated potential Additional comments

Hydropower

$0.030.10 per kilowatt-hour

~1.8 terawatts (currently 0.8)

Mature and cheap technology but with social and environmental costs; unevenly distributed geographically

Nuclear fission

$0.0250.07 per kilowatt-hour

~11.2 terawatts by 2050 (currently 0.37)

Politically difficult; no agreed solution for waste

Biomass

$0.020.09 per kilowatt-hour

~35 terawatts by 2050 using all available non-agricultural land (currently 0.04)

Mature and efficient technology; potential competition between food and fuel; opposition to energy crops

Wind

$0.050.09 per kilowatt-hour

~1 terawatt (currently 0.094)

Intermittent; unevenly distributed geographically

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Source

Estimated cost

Estimated potential

Additional comments

Geothermal

$0.05 per kilowatt-hour

<1 terawatt

Robust, workable technology still to be demonstrated

Solar

$0.250.40 per kilowatt-hour for photovoltaic cells

$0.17 per kilowatt-hour for concentrated solar thermal

Total energy from sun to earth ~100,000 terawatts (currently 0.009 captured); global primary energy needs could theoretically come from area one-tenth size of Sahara

Intermittent; unevenly distributed geographically; costs reducing; storage issue still to be resolved; requires new direct-current high-voltage electricity for distribution; materials for construction could become scarce

Ocean energy

$0.200.40 per kilowatt-hour for tidal stream

$0.90 per kilowatt-hour for wave systems

<1 terawatt for tidal stream

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Source

Estimated cost

Estimated potential

Additional comments

~0.5 terawatts for wave systems

Unevenly distributed geographically; immature technology; marginal potential on global scale

Source: Schiermeier et al. (2008); Additional author comments. Note: Cost for coal-based electricity generation is ~$0.030.05 per kilowatt-hour. Annually averaged global electricity generation supplied in 2005, ~2 terawatts.

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Figure 5: Demand for renewable energy by country/region under a 450 ppm scenario.

Source: IEA (2010).

In the developing world, traditional biomass (fuel wood, animal dung, crop residues) for cooking, heating and lighting provides a large proportion of the energy mix, but its use is inefficient. Modern biomass technology based on agriculture, forest residues and energy crops has the potential to reduce the widely acknowledged economic, social, environmental and health costs of traditional biomass. Much of the projected growth in biomass production will meet non-commercial demand for growing populations in developing countries, but as secondgeneration biofuel technology becomes technically viable, the production of transport biofuels is likely to increase markedly. International trade in modern biomass feedstocks overall is growing and is perceived by some experts to be in its initial stages of development (Heinim and Junginger, 2009). There are regional imbalances between potential supply and expected demand, and developed countries such as the USA, EU and Japan may import in the future from large-scale biomass energy plantations in Latin America, sub-Saharan Africa and eastern Europe (Faaij and Domac, 2006). The wind-energy sector has also been growing rapidly, but it faces economic and geographic constraints. The most technically viable areas for onshore wind energy are in coastal areas (see Table 2). Archer and Jacobson (2005) found areas with particularly strong wind-power potential in northern Europe along the North Sea, the southern tip of the South America, Tasmania, the Great Lakes region and the north-eastern and western coasts of Canada and the USA. Household-scale wind power has been successfully deployed in the developing world to generate electricity particularly in China. Offshore wind energy is less economic than onshore, but wind speed can be much greater.

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Table 2: Summary of the most attractive technical locations for onshore wind energy. Region Location North and west coasts of Scandinavia and the UK, some Mediterranean regions East coast, some inland areas, Pacific Islands North, south-west coast Most coastal regions Most coastal regions, some central zones, especially where mountainous

Europe

Asia Africa Australasia North America South America

Best towards the south, coastal zones in east and north

Source: World Energy Council (2010).

Solar technology generates energy using photovoltaics and concentrated solar power (CSP). Although solar technology appears expensive compared with coal-based electricity generation, in many rural areas it is competitive. In Kenya, for example, there is a large market for solar home systems among rural households (Jacobson, 2007). CSP is a proven if currently uneconomic technology with installations in the USA and Spain. Its main technically limiting factor is direct normal irradiance (DNI), and as a consequence the most favourable geographical areas are north Africa, southern Africa, the Middle East, north-western India, south-western USA, Mexico, Peru, Chile, the western part of China and Australia (IEA, 2010). Other factors hampering the huge potential of CSP include storage, cooling and the logistical challenge of transmission from locations that are remote from centres of energy demand. It is economically feasible for the electricity generated to be supplied over long distances using high-voltage direct current technology with relatively modest levels of subsidy, and ambitious projects such as Desertec and the Mediterranean Solar Plan aim to supply electricity from the Middle East and north Africa to Europe (Ummel and Wheeler, 2008). Hydropower has a major technical advantage over other renewable energies because, in contrast to intermittent sources, it is able to supply base load and peaking requirements. The most installed capacity for hydropower is in Asia, Europe, North America and Latin America. The extent of future technical and economical potential is debated, but most growth is expected in Asia, Latin America and Africa (Bartle, 2002). Fossil fuels will continue to be part of the energy mix of the global economy, and carbon capture and storage (CCS) technology will be required to stabilise greenhouse gas emissions at 450 ppm. CCS systems are technically feasible, but industrial-scale demonstration projects are necessary to improve the experience of combining capture, transport and storage. The

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technology could become economical at carbon prices of around 3050/tCO2 (Campbell, 2008). Evidence suggests that the technical potential for geological storage in deep onshore and offshore geological formations is at least 2,000 GtCO2, but there may be gaps in regional capacity (Rubin et al., 2005). Research that compares the present and future location of point sources of CO2 with suitable storage locations is limited, but transportation using pipelines or shipping is feasible. There are, however, risks associated with the leakage of CO2 from pipelines and geological storage, and abrupt leakage could harm humans and ecosystems.

Forestry and agriculture

Significant opportunities for low-cost abatement arise in both forestry and agriculture, but the fragmentation and the diversity of the social systems in these sectors means that fully realising these opportunities will be highly challenging. Furthermore, the costs calculated rarely if at all incorporate any livelihood losses that may be experienced by households dependent on the ecosystem services in these sectors. Realising these opportunities in order to avert future climate damages would be self-defeating if actions severely disrupt livelihoods. Forest ecosystems make a major contribution to the carbon cycle both as a sink for anthropogenic CO2 emissions and as a store for large reservoirs of CO2; they hold around double the amount of CO2 that is in the atmosphere. Forests cover 30% of the total land area at 4 billion hectares but are very unevenly distributed around the world (FAO, 2005). The 10 countries with the largest forested areas are Russia, Brazil, Canada, the USA, China, Australia, the Democratic Republic of Congo, Indonesia, Peru and India. Deforestation, mostly through land-use change for agriculture, occurs at a rate of around 13 million hectares per year, although there is also forest expansion to temper losses. In recent times, South America and Africa have had the largest net losses, with Brazil and Indonesia alone accounting for twothirds of emissions in 2005. Expansion has recently been reported in Europe and Asia, mostly in China. Forestry can abate future CO2 emissions directly by increasing forested land area through afforestation and reforestation, increasing the carbon density of existing forests and, most importantly, reducing emissions from deforestation and degradation. Indirectly, forestry activities can also increase the sustainable use of biomass to replace fossil fuel CO2 emissions. Most of the abatement opportunity for direct mitigation in forestry can be achieved at low economic costs, although there is some regional variability (Barker et al., 2007; Nauclar and Enkvist, 2009). Forests are multi-functional and provide a rich variety of ecosystem services including flood protection, maintenance of soil fertility, carbon sequestration, hosting of terrestrial biodiversity and water-catchment protection. They support livelihoods by providing income (around 10 million people are formally employed in forest management and conservation and numbers for informal employment are believed to be much higher) and by supplying biomass such as fuel wood, traditional medicines and food (FAO, 2005). The World Bank (2008) estimates that forests contribute to the livelihoods of as many as 1.6 billion people; around 1.2 billion people are dependent on agro-forestry. Agricultural land, for growing food and feed crops for livestock and for pasture, occupies around 38% of the total global land area (FAOSTAT, 2010). The relative area devoted to these three uses differs markedly across regions of the world, reflecting the availability of local natural resources, land availability, soil characteristics, climatic differences, and technology and management practices. The global share of employment in the agriculture sector is around 35%; nationally this share is very high at low levels of economic development but declines as

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countries develop. The International Labour Organization estimates that 1 billion people are employed in the sector but a much larger number are dependent on agriculture for livelihoods (World Bank, 2008; International Labour Organization, 2011). Most of the greenhouse gas emitted directly by agricultural production is CH4 and NO2, but the main abatement opportunities are actually based on carbon sink enhancement restoration of degraded land and improved management of the land used for crops and pasture (Barker et al., 2007; Garnett, 2011). In economic terms, these measures are relatively low cost and require no significant capital investments (Nauclar and Enkvist, 2009). However, carbon sequestration eventually gives rise to diminishing returns as soils reach their maximum potential, and is impermanent if land-management practices revert back. Additional opportunities include better rice and livestock management, reducing post-harvest waste, sustainable intensification and reducing the consumption of livestock products.

Low-carbon cities
There are other cross-sectoral abatement opportunities including waste management and behavioural change, but the most significant opportunity is arguably low-carbon urbanisation, particularly in developing countries. Low-carbon urbanisation could realise abatement opportunities in transport and buildings especially, but also in low-carbon energy supply, waste management, behavioural change and carbon sequestration. Estimates indicate that the population living in urban areas will rise from 3.5 billion in 2010 to 4.9 billion in 2030, and the vast proportion of growth will be in the developing world (UN-HABITAT, 2011). Urban population growth in developing countries is driven in part by migrants responding to the net expected income differentials between rural and urban areas (Todaro, 1980). Lower costs and larger markets are creating new employment and investment opportunities in the developing world (Just and Thater, 2008; Wilson and Dragusanu, 2008). Urban areas are heterogeneous and there is a large variation in both total and per-capita emissions. The determinants are similar to those of CO2 emissions more generally and include economic structure, urban form, stage of economic development, energy mix and state of public transport (Dhakal, 2010). Many studies have found that in the developed world, high population density is negatively correlated with CO2 emissions (Ingram, 1997; Scholz, 2006; Vance and Hedle, 2006; Wilson and Dragusana, 2008). Larger, denser cities create economies of scale that facilitate efficiencies in energy use, recycling and public transport, thereby reducing per-capita emissions (Satterthwaite, 2008; Dodman, 2009; OECD, 2009). The variation in density and design between newer cities in the USA defined by the interstate highway system, and older, more compact cities in Europe which rely more heavily on public transportation, is a vital lesson to developing countries which still have the chance to influence the shape of their cities (World Bank, 2010). Moving closer to the compact city model may allow high-growth developing world cities to continue along their development path while integrating social and ecological systems more sustainably. Including direct and indirect emissions, the buildings sector has the greatest technical and economic potential for delivering long-term reductions in greenhouse gas emissions (Barker et al., 2007). In developed countries, where the foundations of most existing buildings are set for decades to come, retrofitting current infrastructure is the most feasible policy measure for optimising emissions reductions in buildings (UNEP Sustainable Buildings and Construction Initiative, 2009). For low- and middle-income developing countries, however, the opportunity exists to develop low-carbon building policies in order to lock in to a more sustainable development path.

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Box 1 Case study of Masdar City, Abu Dhabi. Masdar City is a carbon-neutral, zero-waste urban development project that was initiated in 2006 to address the long-term aim of establishing Abu Dhabi and the United Arab Emirates (UAE) as world leaders in industries based on low-carbon technologies. The initiative adopts a scaling-up approach to harness the planning and accounting benefits of large economies of scale, while systematically integrating advanced renewable energy technologies in order to deliver greater quantities of usable power (Nader, 2009). For example, the city will be a car-free zone with mobility provided in the form of an electrically powered rapid transport system integrated into external networks. In addition to developing renewable energy technologies that will reduce energy consumption, smart urban design is being incorporated into city plans, and all buildings will integrate intelligent infrastructure to facilitate efficient resource use (Nader, 2009). Masdar City will have the capacity to house 40,000 residents and the potential to create 50,000 jobs in a range of businesses and institutions. It is likely, however, that a significant proportion of these jobs will be in areas requiring a high level of skills, in line with Masdar Citys broader aim to cultivate an innovative academic and business community that will generate significant intellectual property. The city hopes to encourage over 1,500 companies in the field of low-carbon energy technologies to locate their offices and research facilities within the city. To aid these flows of investment, Masdar City will be a free zone, in which companies will have zero taxes and zero import tariffs, among other benefits (Reiche, 2010). Cooperation with the Massachusetts Institute of Technology will help develop the Masdar Institute of Science and Technology a postgraduate educational and research institute that aims to mark Abu Dhabi as a global centre of excellence in sustainable energy-technology research. The Masdar City initiative is a key component of the UAEs long-term economic diversification strategy. As the economy is mainly dependent on exporting fossil fuels, the government hopes that the initiative will increase energy security and help prepare citizens for a post-oil age (Reiche, 2010). The first phase of Masdars development is due to be completed in 2016. The project thus far has experienced a number of challenges including lagging foreign investment and a lack of regional demand; whether Masdar City will act as a blueprint for future eco-cities and energy policy remains to be seen. Questions also remain over whether the concerted drive to attract highly skilled researchers and business people will lead to the evolution of Masdar City as an exclusive and inequitable premium ecological enclave (Hodgson and Marvin, 2010).

The macroeconomic impacts of mitigation

The macroeconomics of mitigation illustrate some of the ways in which policy could affect net expected income differentials. Abatement opportunities can be assessed based on their cost functions, which calculate the marginal cost per unit of CO2e abated (see Figure 6). The cost curves of these functions will usually be convex because the marginal costs of abatement will rise as lower cost gains are exhausted and returns to scale diminish. Cost functions for

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opportunities will vary in different economies because of underlying economic conditions and because the technical potential for opportunities will differ; they can also change over time because innovation has the potential to lower average costs. Figure 6: Abatement cost curve for a specific technology.

Source: Stern (2006).

The economic potential of abatement opportunities to 2030 has been assessed using a variety of models, which are categorised as top-down and bottom-up, assuming an optimal response to exogenous carbon prices (Barker et al., 2007; van Vurren 2009) 2 . Top-down models simulate substitution of inputs across the whole economy whereas bottom-up models focus more on substitution of technologies within the energy system. Most models, whether topdown or bottom-up, agree that the greatest economic potential lies in developing countries, but realising them is likely to require international transfers from developed countries. Results for sectors differ across models but tend to show that the largest potential for direct emission reductions is in the energy supply sector both in absolute and relative terms (see Figure 7). Without new technological breakthroughs, the economic potential of decarbonising the transport sector is limited and it is expected to remain largely fossil fuel based in 2030.

The methods of optimisation can differ across the models.

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Figure 7: Economic potential for direct CO2-emission reduction in the energy supply, transport, building and industry sectors based on a comparison of top-down and bottom-up models.

Source: van Vuuren et al. (2009).

The macroeconomic costs of mitigation are highly uncertain and projections are predicted on the underlying assumptions of models. van Vuuren et al. (2009) found that the direct costs of abatement to meet a stabilisation target of 450 ppm CO2e are similar in range for top-down and bottom-up approaches and, assuming favourable policy design for the former and implementation for the latter, they come in at $100-1,000 billion per annum to 2030. The actual macroeconomic costs could be quite different, particularly, as is likely, if policy design and implementation is not economically optimal. The macroeconomic costs borne by emissions-intensive economies, for instance, could be higher than the direct costs (see Figure 8). Mattoo et al. (2009) for instance find that even a modest global agreement on mitigation depresses manufacturing output and exports in economies such as China and India. The Stern Review estimates the average costs to stabilise at 550 ppm CO2e using top-down and bottom-up at around $1,000 billion per annum or the equivalent of 1% of gross domestic product (GDP) in 2050 within a range of 3% of GDP. Weyant (2009) argues controversially that the range is actually 110% of GDP if less optimistic policy outcomes are considered.

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Figure 8:Greenhouse gas emissions per unit of GDP for countries/regions, 2005.

Source: OECD (2009).

In the transition to a low-carbon economy, labour markets and wages will not exhibit the flexibility assumed by many top-down models. When labour-market rigidities are incorporated into simulations of the economic costs of mitigation, the losses to GDP are significantly higher (Babiker and Eckhaus, 2007; Guivarch et al., 2011). The magnitude of the effect varies depending on economic structure, but this finding also suggests that policy makers crafting mitigation policy need to be mindful of its consequences for unemployment, which is unlikely in the short term to be in political terms a price worth paying for mitigation. Transitional effects from labour markets could be ameliorated by labour subsidies and training funded by revenues from carbon taxes (Babiker and Eckhaus, 2007; Guivarch et al., 2011). There could also be an incongruity between the flexible global labour markets that will be required to mitigate climate change cost effectively, and rigid national labour markets could be stiffened by restrictive migration policies. Certain abatement opportunities will also require more upfront capital expenditure as part of their costs (Figure 9). For the buildings and transport sectors the investments required are particularly high, but these are no regrets options where the overall costs are justified economically by the benefits even without emissions pricing. The potential gains from lowcarbon urbanisation, which depends on realising cross-sectoral opportunities, are substantial, but achieving these gains in a capital-constrained environment would be challenging. Without upfront low carbon investments, there is the aforementioned danger that economies will become locked-in to emissions-intensive infrastructure. Thus, the economic costs of mitigation will rise with inaction.

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Figure 9:Capital intensity and abatement potential for sector (/tCO2e).

Source: Campbell (2008).

The global economic costs of greenhouse gas abatement may be uncertain but they will not be uniform across either countries or sectors. For all but the most pessimistic cost estimates, aggregate mitigation costs should be absorbed by future global economic growth. But there still exists some potential for regulatory arbitrage within sectors. Emissions-intensive firms open to international trade could be vulnerable to free-riding competitors, although the potential of relocation is limited because there are stronger determinants of location than greenhouse gas mitigation policies (Brunnermeier and Levinson, 2004; Copeland and Taylor, 2004). The impact on location and trade could be higher, however, if access to inputs such as capital stock, labour, technology and infrastructure is equivalent or better in the destination country, and if domestic markets are large. Thus, firms and labour could cross borders in the absence of regional agreements.

Low-carbon jobs
Achieving stabilisation of greenhouse gas concentrations at 450 ppm CO2e will alter the geography of the energy system and its labour market. There were around 2.3 million jobs in the renewable energy sector in 2006, with most jobs growing and collecting feedstock for biofuel production in Brazil, USA and China; a large number of jobs are also in Chinas solar thermal industry (UNEP, 2008). Renewable energy production is more labour intensive than fossil fuel production in manufacturing and operational terms, although this is likely to lessen in the long term as efficiency gains bring down costs (Kammen, 2006; Fankhauser et al., 2008; see Table 3). Roughly 9 million people are directly employed in the energy sector, mostly in coal, gas and hydropower (Rutovitz and Atherton, 2009). Direct employment in the energy sector is relatively small compared with other sectors and it is male dominated. It is expected that most new recruitment would be sourced from the existing workforce.

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Table 3: Average projected employment over life of facility, jobs per megawatt of energy. Note figures are corrected for differences in capacity between fossil fuel plants and renewable installations. Construction, manufacturing, installation 5.766.21 0.432.51 0.40 0.27 0.25 Operation and maintenance, fuel processing 1.24.80 0.27 0.382.44 0.74 0.70

Facility

Total employment

Solar PV Wind Biomass Coal Gas

Source: Kammen et al. (2006).

7.4110.56 0.712.79 0.782.84 1.01 0.95

UNEP (2008) projects a significant increase in employment in the renewable energy sector by 2030 including up to 12 million new jobs in biofuel-related agriculture and industry but accurate predictions are not possible because numbers and types of jobs will be strongly influenced by future policies. Some care is required in distinguishing net job creation from gross job creation. Low-carbon policies are also likely to induce structural change in economies that lead to the reallocation of labour across sectors and multiplier effects that affect indirect employment opportunities (Fankhauser et al., 2008). There is limited analysis available on the skills that will be required for low-carbon jobs. Dierdoff et al. (2009) found that less than a tenth of the occupations in renewable energy in the USA are low-skill jobs but that there may be more opportunities in green construction and manufacturing. If the USA is typical of developed countries and relatively few low carbon jobs are low-skill jobs, then polices will be required to improve access to these occupations (Bivens et al., 2009; Martinson et al., 2010). On the other hand, Pollin et al. (2009) argue that clean energy investments will create more opportunities across all skillsets and provide better job advancements prospects than a fossil fuel-dominated energy sector. The largest source of lowcarbon jobs for the low skilled in the developing world is likely to be in labour-intensive biofuel harvesting (UNEP, 2008). Estimates of the new opportunities that may be created in forestry are difficult to calculate and although new policies could have positive long-term impacts on employment, the industry standard for afforestation and reforestation projects is based on either mechanisation or seasonal, low-skill contract work (UNEP, 2008). Most of those formally employed in forestry are men, but there are an increasing number of opportunities for women in subsectors such as agroforestry.

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Low-carbon policy and migration

Nations will require a portfolio of low-carbon policies that is sensitive to their own socioeconomic conditions. A variety of policy instruments have been proposed for this portfolio targets, market mechanisms such as taxes, subsidy reform and emissions trading schemes, regulatory standards, technology support policies, voluntary agreements and information instruments. There is a consensus among economists that pricing greenhouse gas emissions through market mechanisms should be the kernel of policy portfolios because by offering flexibility in the timing and the sources of abatement they will, in theory, incentivise costeffective mitigation (Stern, 2006; OECD, 2009). Other instruments are likely to be necessary to complement pricing if there are barriers that could impede the responses of firms and consumers to price signals. Barriers to technological innovation and deployment, for example, mean that public investment into research and development of emissions-reducing technologies and increased cooperation between the public and private sector are likely to be required (Barker et al., 2007). The lack of empirical evidence on the effect of current mitigation policies on mobility makes this section highly speculative and the focus of the analysis is mainly on how mitigation could affect key variables of interest. Ambitious targets in developing countries for large-scale hydropower production could directly result in internal displacement. Growth in hydropower production is projected in Asia, Latin America and Africa, and exploitation of potential is explicitly targeted in the national climate change plans of Brazil, India and China (Bartle, 2002; World Resources Institute, 2010). The development of large-scale hydropower infrastructure is closely associated with controversies surrounding the forced displacement and resettlement of vulnerable populations living upstream in, or downstream of, impoundment zones and the subsequent loss of livelihoods. Moreover, indirect environmental impacts from the development of hydropower can also lead to displacement. It has been estimated that around 4 million people are displaced every year as a result of dam-based development, although this number is likely to be larger (World Bank Environment Department, 1996). Indigenous and tribal peoples have suffered disproportionately from the negative impacts of large hydropower projects, which over time can perpetuate problems for people living at increasing distances from the site of the project, leading to multiple displacements (World Commission on Dams, 2000; Gellert and Lynch, 2003). Ambitious targets in both developed and developing countries for biomass consumption and production have the potential to influence internal mobility and displacement. Targets have already been set for biofuel use in several developed and developing countries to 2020 and beyond. Fischer (2009) found, using an integrated assessment modelling framework, that the demands of future biofuel production on land use could be substantial and real cereal prices considerably higher if targets are ambitious and the development of capital-intensive secondgeneration conversion technology is inhibited. Most of the expansion in land use whether for first-generation or second-generation biofuel production would be in Africa and Latin America. Major changes in supply chain infrastructure will also be needed to link production to global markets (Richard, 2010). Mobility is likely to be directly affected by some new employment opportunities in biofuel harvesting, but it could also be indirectly affected if biomass production has a disruptive effect on livelihoods by diminishing the quantity and quality of local ecosystem services, or if higher food prices increase food insecurity. The growth expected in biomass production would be expected to have an effect on households who are dependent on forests for their livelihoods, especially if a lack of rights renders them vulnerable to access restrictions. Managing the trade-offs or synergies in complex socioecological forestry systems is challenging, but a greater role for forest users in governance is likely to improve outcomes (Agrawal et al., 2008; Persha et al., 2011). Processes for land transfers to large-

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scale biofuel plantations vary considerably but customary land rights are often poorly compensated (German et al., 2010). In Indonesia, for example, the customary rights of indigenous people have been ignored by some oil palm plantations (Phalan, 2009). Alternatively, with effective governance at multiple scales, these new markets do offer opportunities for smallholders and households to diversify income (Rist et al., 2010). The most technically viable areas for onshore wind energy are in coastal areas, which have been historically associated with population density. However, the elevation necessary for large-scale wind farms makes it less likely that they will compete for land with dense populations. More detailed spatial, economic and geographical analysis is needed to accurately assess the potential of population displacement. Similarly, large-scale CSP projects would be more likely to be located in areas where population is sparse. Small-scale hydropower, biomass, wind and solar technologies, on the other hand, have more potential in the medium to long term to affect income differentials if they improve energy access in poor rural areas.

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Box 2: Biofuels and migration. The biofuels industry has had mixed socioeconomic impacts at country and regional levels. In Brazil, biofuels are an established industry, with around 1 million direct jobs in 2001 and a further 300,000 jobs created indirectly in manufacturing and other sectors (Moreira, 2006). African countries, most notably Tanzania, Kenya, Cameroon and Nigeria, have large swathes of land suitable for biofuel production and an abundance of low-skilled labour that makes them well positioned to capture the benefits from increasing global demand for biofuels (Mitchell, 2011). Many of the worlds poorest countries are well placed to become major producers of biomass for first-generation biofuels, and most of the jobs created are likely to be in impoverished rural areas (FAO, 2008). For large-scale production, increased job opportunities for unskilled workers, higher and more regular income flows, road expansion and wider social networks can have positive livelihood effects. If expected benefits outweigh the cost of migration, this could potentially stem or even reverse the flow of migration to urban areas (Johnson and Rosillo-Calle, 2007). Recent international collaborations involving both governments and the private sector could result in the emergence of new migration corridors. For example, Chinese farms are investing in oil palm plantations in the Democratic Republic of Congo, and biofuels initiatives in Mozambique have been funded by companies in Mauritius (Dauvergne and Neville, 2010). There has been some debate, however, over the number of jobs likely to be created. German et al. (2010) affirm that employment levels can be far less than those related to displaced land uses; the FAO (2008) states that new job creation will only be higher if biofuel-feedstock production does not displace other agricultural activities, or if labour requirements in the biofuels industry are greater. Labour intensity can vary substantially within a country and not all rural areas could expect to benefit from increased job creation (Kojima and Johnson, 2005). Smallholders working in emerging biofuels industries such as jatropha cultivation may not realise gains as quickly (German et al., 2010). While biofuels development if managed effectively could contribute to economic growth and alleviate poverty, controversies have emerged over the real beneficiaries of biofuels expansion, and displacement both physical and livelihood is plausible. Deforestation for land-use conversion has been particularly widespread in industrial-scale plantations, resulting in the displacement of those who depend on forests for their livelihoods. Market incentives which favour biofuels production over more established agricultural industries can raise the price of land, driving poorer people away from their means of production and fragmenting communities. Poorer households also face barriers which prevent them from establishing secure land rights which protect their rights to the land. There is additional evidence to suggest that women are more vulnerable to displacement, as gender discrimination may limit their ability to own or inherit land (Department for International Development, 2007; FAO, 2008). In Kenya, for example, women provide 70% of agricultural labour in the country yet own only 1% of the land that they farm with their families (Department for International Development, 2007). Smallholder farmers and pastoralists with customary land rights are also likely to be more vulnerable to eviction from the large-scale transfer of land to investors. The development of biofuels clearly has both technological and economic potential in the long term, and southsouth partnerships will encourage economic growth in developing countries. However, effective governance and policy will be required to minimise displacement and negative socioeconomic impacts.

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Fossil fuel energy production and consumption subsidies distort the price of greenhouse gas emissions, and their elimination is widely acknowledged as a necessary step towards the pricing of emissions. IEA (2008) estimated the price gaps because of energy subsidies in a number of non-Organisation for Economic Co-operation and Development (OECD) countries and found that in many cases the deviation from world prices was significant. Simulation of the multilateral removal of these subsidies results in real household income losses in emissionsintensive non-EU eastern European countries, Russia and oil-exporting countries, and at the same time gains in energy-importing countries such as the EU and Japan, mostly because of changes to the terms of trade (OECD, 2009). Thus, if winners and losers are connected by established migration corridors, a significant change in expected net income differentials may influence the volume and direction of migratory flows (see Figure 10). Figure 10: Top migration corridors, 2005 (millions of migrants).

Source: World Bank (2009).

Although low-carbon urbanisation is a technically and economically viable abatement opportunity, it will require significant upfront capital investment. It is not a straightforward policy challenge because it is based on a systemic approach to policy in a locale that has traditionally been governed at different scales by a variety of actors. Effective city-level governance is likely to be necessary, and strong political leadership of mayors has proved useful in the developing world (Dhakal, 2010). Low-carbon cities could be more attractive to migrants if net expected income differentials are widened by reductions in the cost of living, or if energy-efficiency savings and additional agglomeration effects spur economic growth. The quality of life in urban areas that have been planned sustainably would also be a pull factor. This notwithstanding, the impact of low-carbon urbanisation on ruralurban migrants is unlikely to be entirely beneficent. Land values in high-density compact cities are usually expensive, and public transport will not be affordable to all. In Delhi, despite a master plan to encourage mixed-use planning, large numbers of low-income ruralurban migrants settling on its periphery have been excluded from its benefits (Tiwari, 2003).

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Current levels of investment in low-carbon technology are dominated by China and the USA (see Figures 11 and 12). Chinese state-owned or partially state-owned organisations are investing heavily in large-scale low-carbon energy supply and the country itself is also attracting the most investment from public financial markets. The clear direction on low-carbon policy from Chinas 12th 5-year plan makes it attractive to public investors. Private investment in research and development has traditionally been strong in the USA and it is well positioned to discover low-carbon innovations. Recent stimulus packages in the wake of the financial crisis have also allocated significant resources to low carbon energy supply especially in the USA ($65bn), China ($46bn), South Korea ($32bn), Germany ($15bn) and Japan ($10bn). Investments, particularly in large-scale low-carbon energy supply, will position national economies favourably for a future where greenhouse gas emissions are priced. Investment would be expected to be a pull factor for the medium- and high-skilled labour required by the renewable energy sector. For low-skilled labour in nearby countries, investment could indirectly affect future net expected income differentials. This could happen if the macroeconomic costs of mitigation are lowered, if investment stimulates endogenous technological change or if energy-efficiency savings are recycled into productive investments that result in additional growth. Figure 11: Asset finance for large-scale energy, 2010 ($ billion).

Source: World Economic Forum (2011).

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Figure 12: Venture capital and PE finance for clean energy, 2010 ($ billion).

Source: World Economic Forum (2011).

International sector agreements based on a variety of policy instruments have been proposed as a cost-effective policy response to the uneven distribution of mitigation costs across countries and sectors (de Coninck et al., 2008). Well-designed agreements could ameliorate competitiveness impacts for individual countries and would be expected to diminish any widening in income differentials. Without new technological breakthroughs, the economic potential of decarbonising the transport sector is limited and it is expected to remain largely fossil fuel based in 2030. IEA (2010) calculates that the low-carbon policies required to stabilise greenhouse gas emissions at 450 ppm CO2e would reduce demand for crude oil and, as a result, real prices would increase more slowly than in other scenarios (see Figure 13). Rising global demand and the necessity to develop more expensive sources of supply means that prices are expected to remain volatile. The precise impact of direct transport costs on mobility will vary among migrants but given that average costs to 2030 are expected to be high, it would probably have a dampening effect on movement. Figure 13: Average real crude oil price based on policy scenarios, 19802035 ($/barrel).

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Source: IEA (2010).

International governance of climate change could have an impact on mobility and displacement. Incomplete participation of countries and industries substantially increases the economic costs of mitigation because it reduces flexibility in ways to meet stabilisation targets (OECD, 2009; Weyant, 2009). These additional costs would exacerbate the unequal distribution of costs across countries and sectors, and as these costs accumulate with inaction and climate damages rise, belated policy could result in volatile changes in net expected income differentials between countries, livelihood losses and direct transport costs. Substantial differences in costs between countries may have an effect on international mobility because there is usually a correlation between GDP losses and unemployment (Okun, 1970; Lee, 2000). International governance of climate change is an unprecedented game of prisoners dilemma complicated not only by the uneven distribution of both costs and benefits but also because the rewards for cooperation and defection change over time. In a pessimistic scenario, an effective group of national cooperators is not possible (Helm, 2008). The major challenge that the United Nations Framework Convention on Climate Change (UNFCCC) has to grapple with is that realising opportunities for abatement in developing countries will require new transfer mechanisms to address the responsibility of developed countries for historic emissions. Two important policy instruments to provide international transfers have been established: the CDM (valid until 2012) and REDD+. A green climate fund will also provide financial support for mitigation and adaptation in the developing world based on contributions from developed countries there is a commitment to provide $100 billion per year by 2020. The CDM offers developed countries with more cost-effective greenhouse gas emissions abatement options by allowing reductions to be made more flexibly in funded projects located in developed countries. The projects in these host countries also have a further aim of meeting sustainable development objectives. However, sustainable development has no international standards and host countries can define their own objectives. Sutter and Parreo (2007) find evidence of a trade-off between cost-effective emission reduction and sustainable development objectives in CDM projects, which are heavily weighted to the former. Of currently registered CDM projects, most are based on hydropower (30%), wind power (19%), biomass (11%) and biogas (11%); biofuel projects are rare because of rule restrictions (UNFCCC, 2011). This looseness in defining sustainable development objectives means that there is currently no systematic process to protect vulnerable people from displacement as a result of a CDM project. Governance of future iteration of the CDM should improve the criteria for sustainable development objectives. Similarly, the new rules for REDD+ and the green climate fund also face the challenge of managing this trade-off in an equitable way. Polices on conservation projects in multilateral development agencies have been broadened to re-define the concept of restrictions on access to natural resources to include livelihood displacement as well as physical displacement (Cernea, 2006); and this revised concept seems highly relevant to mitigation policy.

Renewable energy and rural development

Low-carbon policies have the opportunity to improve the access of rural areas in the developing world to energy, which could have a highly significant impact on mobility. The relationship between energy consumption and per-capita income is complex, but they are strongly correlated. Reducing poverty in rural areas will require improved access to energy in general and electricity in particular. Renewable energy technologies have an important part to play because in many rural areas it is not economic to extend large centralised electricity grids to meet their needs. Better energy services can improve incomes directly by improving productivity in agriculture and non-agriculture enterprises and indirectly by enhancing

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education and health outcomes through better heating, lighting, cooking and communications (Cabraal et al., 2005). Martinot et al. (2002) captured lessons to be learned from projects that have used renewable technologies such as modern biomass, photovoltaic solar and smallscale hydropower and wind to improve development outcomes. The most cost-effective balance between off-grid and on-grid energy will vary considerably by area and will depend on the marginal cost of grid extension (Deichmann et al., 2010). Stand-alone renewable technologies and micro-grids can be competitive in rural areas and their effective deployment (including through the CDM) is likely to boost rural incomes and be a pull factor at areas of origin. Beyond the short term with increased income, the economic costs of mobility may be less prohibitive, and these movements would be part of a pathway to development and not environmentally induced mobility with operational or geopolitical difficulties. Thus, mitigation policy if carefully crafted and implemented could be one way of many to address potential volatilities in movements that may be induced by environmental change.

Conclusion: plausible scenarios for the impact of low-carbon policy on migration

The precise impacts of existing mitigation policy on migration are often difficult to distinguish, and more empirical research is urgently required in this area. To sum up, low-carbon policies could have impacts on population mobility and displacement by affecting the net expected income differentials between areas of origin and destination, disrupting the livelihoods of households reliant on natural resources, changing direct transport costs and altering returns to human capital. The uncertainties surrounding future mitigation policy are considerable, and the complexity of the migration decision make judgements on orders of magnitude challenging. Nevertheless, the impact on mobility in the short-to-medium term is likely to be modest with some new direct employment opportunities for a range of skills and the potential for low-income smallholders and households to diversify income. In the longer term, if the transition to a lowcarbon society induces a new wave of innovation, the impact on labour markets could be transformative (Milunovic and Rasco, 2008; Fankhauser et al., 2009). This particular scenario will depend on the success of national policies, flexibility of labour markets and effective international climate change governance. With delayed action, the policies then required to stabilise greenhouse gas concentrations could result in economic and social instability, which might induce new volatilities in migratory flows. In terms of orders of magnitude, the largest expected effects on mobility and displacement illustrate that low-carbon policy is in some ways both a threat and an opportunity to reducing poverty in the developing world. Mitigation measures, imposed inequitably, will disrupt the livelihoods of households dependent on natural resources. Successful adaptation to climate change should be sensitive to social structure and for mitigation surely the same is true (Adger et al., 2005). The sheer size of the developingworld population dependent on agriculture and forestry raises concerns that poorly designed and implemented policies to increase low-carbon energy supply and improve carbon sequestration could, paradoxically, harm the livelihoods that mitigation policy is intended to protect. On the other hand, effectively deployed small-scale renewable energy technologies could provide an important boost to rural incomes, especially over the medium-to-long term, and lower the costs of mobility. In short, if low-carbon policies are crafted systemically at appropriate levels of governance and in accordance with other strategic objectives such as sustainable development, energy access, poverty reduction, adaptation to climate change and maintaining ecosystem services and biodiversity, the outcomes of greenhouse gas abatement are much more likely to be beneficial in the short, medium and long term.

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