The IPCC is the international body set up to distil a consensus view for policy makers on the science of climate change, its impacts and, in this case, the costs of mitigating it.
We are not talking about anything like, say, a doubling of energy prices.
One of the panel's conclusions is that in the transport area, "most studies indicate net direct costs of less than $US25 a tonne of carbon avoided."
Let's say an oil company had to pay $US25 a tonne of carbon emitted for the right to sell petrol.
That would translate to 3.5c a litre at the petrol pump at today's exchange rate, assuming the cost was entirely passed on to the consumer.
Overall, the IPCC has concluded that if the 39 developed countries that are signatories to the Kyoto Protocol meet their targets for reduced emissions, their combined gross domestic product in 2010 will be between 0.1 and 1.1 per cent lower than it would otherwise be.
At the mid-point of the range, that would amount to around $US125 billion ($NZ300 billion) of lost output, equivalent to around $300 a person. It would shave around a tenth of 1 percentage point off annual GDP growth rates over 10 years.
Those estimates assume untrammelled emissions trading between Kyoto Protocol countries, that is, trading in permits to emit greenhouse gases.
Without trading, the costs of complying with the Kyoto Protocol would be twice as high - 0.2 to 2.2 per cent off 2010 GDP, the IPCC reckons.
Each country's cap of allowed emissions could be parcelled up into tradeable units, most likely tonnes of CO2 equivalent.
The idea of emissions trading is to use a market mechanism to discover the marginal cost of reducing emissions so that the most cost-effective measures are undertaken , regardless of where in the world that might be.
Those required to reduce emissions could decide whether it was cheaper to undertake the necessary physical measures themselves, or to buy surplus permits from someone else.
The cost of reducing greenhouse gases is likely to be higher in New Zealand than other developed countries, because in some respects it starts from a cleaner point.
Whereas the United States, for example, derives around 40 per cent of its electricity from coal-burning power stations, heavy emitters of carbon dioxide, two-thirds of New Zealand's electricity is hydro and the thermal generation is powered by gas, which produces about half as much CO2 as coal.
In cabinet papers released late last month, officials cite studies estimating that emissions trading could reduce the cost for New Zealand of meeting its Kyoto targets by up to 60 per cent in the short term, and 20 per cent in the longer term.
Permits ("assigned amount units" or AAUs in the jargon) would also arise from forests planted since 1990 ("Kyoto forests"), reflecting CO2 the trees take out of the atmosphere.
One decision the Government will have to make is whether AAUs from Kyoto forests should be part of a trading regime or, in effect, hoarded.
The Government could retain enough AAUs from carbon taken up by Kyoto forests during 2008 to 2012 to offset growth in emissions since 1990, officials say.
"This would meet our Kyoto obligations and shield domestic emitters from the need to reduce emissions ... However, this would show little environmental leadership and would contradict ... assurances New Zealand has given internationally that it will not shield its domestic emitters. Hence this option is not recommended."
The IPCC says that technological progress since it last reported in 1995 has been faster than expected.
It cites an emerging market for wind turbines, the rapid elimination of perfluorocarbons from aluminium production, efficient hybrid (petrol-electric) cars and progress in fuel cell technology.
Herald Online feature: Climate change
Intergovernmental Panel on Climate Change
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Summary: Climate Change 2001
United Nations Environment Program
World Meteorological Organisation
Framework Convention on Climate Change
