It can be done

McKinsey & Co. on how to reduce greenhouse gases

Posted by David Roberts at 10:09 AM on 30 Nov 2007

Read more about: climate | energy | United States | greenhouse-gas emissions

McKinsey & Company is a very large, very old, very prestigious consulting company. They've just released an ambitious report called "Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?"

Here's what they did:

Starting in early 2007, a research team from McKinsey worked with leading companies, industry experts, academics, and environmental NGOs to develop a detailed, consistent fact base estimating costs and potentials of different options to reduce or prevent GHG emissions within the U.S. through 2030. The team analyzed more than 250 options, encompassing efficiency gains, shifts to lower-carbon energy sources, and expanded carbon sinks.

Here's what they found:

The United States could reduce GHG emissions in 2030 by 3.0 to 4.5 gigatons of CO2e using tested approaches and high-potential emerging technologies. These reductions would involve pursuing a wide array of abatement options with marginal costs less than $50 per ton, with the average net cost to the economy being far lower if the nation can capture sizable gains from energy efficiency. Achieving these reductions at the lowest cost to the economy, however, will require strong, coordinated, economy-wide action that begins in the near future.

Executive summary (PDF). Full report (PDF).

It's well worth reading the summary. There's tons of great stuff, but this jumped out at me:

Almost 40 percent of abatement could be achieved at "negative" marginal costs, meaning that investing in these options would generate positive economic returns over their lifecycle. The cumulative savings created by these negative-cost options could substantially offset (on a societal basis) the additional spending required for the options with positive marginal costs. Unlocking the negative cost options would require overcoming persistent barriers to market efficiency, such as mismatches between who pays the cost of an option and who gains the benefit (e.g., the homebuilder versus homeowner), lack of information about the impact of individual decisions, and consumer desire for rapid payback (typically 2 to 3 years) when incremental up-front investment is required.

Here's a representation of that startling fact (click for a larger version) -- the negative-cost options are on the left and the positive-cost options on the right:

For story: It can be done
7 Comments | Post a Comment

Yes but

I agree - great message, but it hugely understates the potential to increase generation efficiency. Maybe that's just because they didn't know to look for it, but I get nervous by any report sponsored by a bunch of utilities (National Grid and DTE were listed among their sponsors).

But this is nitpicky - overall, great report.

by Sean Casten at 10:58 AM on 30 Nov 2007

Where's my baby, RE<C?

The solar resource is much much larger than coal, oil, and gas reserves combined. Where is solar industrial process heat, solar chilling, solar cogeneration, deep geothermal power and heat, firewood, biomass district heating? PV cheaper than CSP? Nuclear cheaper than both? Color me blue.

by sunflower at 11:08 AM on 30 Nov 2007

marginal negative cost

This is great news, if in fact it could be considered "news", since it's been pretty clear that fixing inefficiencies (both market and energy) is in everyone's long-term best interests.

But...

Almost 40 percent of abatement could be achieved at "negative" marginal costs, meaning that investing in these options would generate positive economic returns over their lifecycle. ...
Unlocking the negative cost options would require overcoming persistent barriers to market efficiency, such as mismatches between who pays the cost of an option and who gains the benefit (e.g., the homebuilder versus homeowner), lack of information about the impact of individual decisions, and consumer desire for rapid payback (typically 2 to 3 years) when incremental up-front investment is required.

The thing is, these mismatches, like most externalized costs, represent an opportunity for profit by certain parties to the transaction. These profits are taken at a cost to other parties (and/or to the commons) but these sources of profit are well established in the economic and political system, and some business are built primarily around exploiting these inefficiencies to their own advantage. They are an accepted part of business as usual.

So you're back to the same old problem: A few people are greatly advantaged, while many people are slightly disadvantaged. The costs are spread widely, so the incentive for any given individual to try to change them is small. While the profits are concentrated, and the incentive of those who profit to preserve the status quo is large.

(There's some econo-speak term for this problem, but I don't know it off hand.)

Also, these inefficiencies are part of the status quo, so many people who are being harmed by them either don't notice the harm, or don't think that it's anything bad or unusual -- just part of "life isn't fair" (which is IMO the biggest bloody cop-out in all of history, but I digress).

by GreenEngineer at 11:15 AM on 30 Nov 2007

Yow

New nukes cheaper than distributed solar PV? And wind?

Doesn't seem like their figures have taken into account a few things. Like cleaning up and disposing of waste and rising fuel costs.

I wonder how this whole chart would shift were GHG climate change costs, medical costs from pollution, and cost for wars over oil/nuclear prolideration added in?

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

by amazingdrx at 11:24 AM on 30 Nov 2007

Great - echoes a lot of other reports!

Of course the same news about negative costs was in the Stern Review and IPCC WG3 - in fact I seem to recall a very similar graph in the WG3 report, I'll have to dig it up.

Also, my impression is that the higher oil and other energy prices go, the more this graph shifts down below zero.

Anyway, the more news this sort of stuff gets, the better. It is absolutely true that financial barriers to efficiency in particular (residential and business HVAC primarily) are hiding huge potential rewards. Capital investment money is our friend to a large degree across the whole renewable energy/efficiency spectrum.

by apsmith at 11:41 AM on 30 Nov 2007

Dunno

Dunno got a few problems with that graph?

Cellulosic = negative cost?(!?)
Solar Thermal costing more than Solar Photovoltaics?

Something fishy there.

-David Ahlport

by GreyFlcn at 2:14 PM on 30 Nov 2007
[ Parent ]

Of course, without a doubt, it can be done....

......and we will do it.

Something is happening. Something is definitely happening; but people generally are not yet adequately focusing their attention upon an extremely forbidding and apparently unforeseen human-induced, distinctly human predicament that could present itself to humanity in the offing.

We have a "climate divide," so it is reported. In the "overdeveloped" world Millions of people emit vast amounts of greenhouse gas, while Billions of people the "underdeveloped" world produce scant emissions.

It is also worth noting that the overdeveloped world is showing a decline in the growth rate of absolute human population numbers, while the underdeveloped world is witnessing a continuing explosion in its population numbers. In the overdeveloped world, Millions of people are moving toward the stabilization of their populations, while Billions of people in the underdeveloped world are rapidly growing their numbers.

A person in an overdeveloped country like the USA consumes 32 times more resources than a person in an underdeveloped country.

These patterns and imbalances must become primary sources of immediate concern for the human community, I suppose, because global overgrowth activities of human species could soon produce either an economic breakdown or an ecologic collapse or both in these early years of Century XXI.

What leaves me with a sense of foreboding has to do with something within the psyche of the family of humanity that is making it difficult for our species to acknowledge, let alone address, the threat to life as we know it and to the integrity of our planetary home which is posed to humankind by the gigantic scale and rapid growth of unbridled consumption, production and propagation activities of the human species now overspreading the surface of Earth.

How do things look to you?

Sincerely,

Steve

Steven Earl Salmony
AWAREness Campaign on The Human Population
http://sustainabilitysoutheast.org/

by stevenearlsalmony at 2:47 PM on 30 Nov 2007

ADVERTISING POLICY

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