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Beyond technology: the demand side of climate change solutions

by Felix Creutzig

Can we rely on renewable energies and electric cars to win the climate race? Surely, such technologies will make great contributions, and, in fact, are absolutely necessary to achieve ambitious climate goals, such as the 2C target. Yet, they might not be sufficient.

In a comprehensive review, published in Annual Review of Environment and Resources, we investigate the role of the demand side to climate change mitigation. The review finds substantiative opportunities in particular in the food sector, and in cities. At least 20% counterfactual reductions in emissions can be achieved by reducing meat consumption, by modal shift and compacter urban form in urban transport, and in the building sector by behavioral change. The overall range is broad and uncertain, and higher contributions of the demand side are feasible.

Demand-side solutions fall into two (overlapping) classes: infrastructures and behavioural change. Infrastructures essentially form endogenous preferences and set the cost structures for consumption choices (think about the convenience of public transport or car driving in Manhattan and Houston). Behavioural change involves opportunities to change entrenched habits, partially also by modifying ‘soft’ infrastructures, e.g. by nudging.

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The review also identifies key hurdles to perform assessment of demand-side solutions. Key among them is that conventional cost-benefit analysis is hard to carry out when preferences are not exogenously given. Then costs and benefits not only depend on given environmental outcomes of a specific intervention, but also on how preferences changed by the intervention. A comprehensive model of human behaviour is required (see figure above).

The demand side received only scarce attention in recent assessment reports and the reasons are not necessarily obvious. The technical difficulties certainly discourage quantitative assessments. Yet, given its likely importance, more studies should systematically tackle this challenge, notably learning from the experience in urban studies.

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