McKinsey ranks mitigation technologies

In the past, I have mentioned both marginal abatement cost curves for greenhouse gasses (curves that describe the cost of eliminating each successive tonne of greenhouse gas) and the economic analyses done by McKinsey. Recently, a friend reminded me of an informative graphic from one of their reports:

The whole report is available online. All the options listed on the left hand side, below the horizontal line, are actually projected to save money as well as reduce greenhouse emissions. Those to the right are progressively more expensive, up to about 50 Euros a tonne.

The graphic is quite interesting because it shows a ranking of the cost at which different technologies can achieve emission reductions. It’s also interesting that they projected how many technologies need to be implemented – and to what degree – to achieve stabilization of greenhouse gas levels at 550, 450, and 400 parts per million of CO2 equivalent.

Put on a graphic like this, it all looks very achievable.

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. In the fall of 2005, I began reading for an M.Phil in IR at Wadham College, Oxford. Outside school, I am very interested in photography, writing, and the outdoors. I am writing this blog to keep in touch with friends and family around the world, provide a more personal view of graduate student life in Oxford, and pass on some lessons I've learned here.

10 thoughts on “McKinsey ranks mitigation technologies”

  1. McKinsey Report: $170 billion until 2020 to cool the planet
    5 Aug 08

    The McKinnsey Institute has released a new report finding that a $170 billion annual investment from now to 2020 could cut projected global energy demand in half and also get us halfway to solving the climate crisis.

    Here’s the kicker, on top going a long ways to reducing greenhouse gas emissions, the overall savings would from reduced energy use would be $900 billion by 2020 and none of the energy efficiency measures would require compromising the consumer’s comfort or convenience. And all this could be done with existing energy efficiency technology.

  2. I think you mean that the options on the left (not right) side are projected to save money, unless of course ‘right’ was an evaluative statement and not a directional one. Given these results, it is odd that governments are not doing more about the left hand side of the figure, rather than throwing around money and rhetoric regarding technical fixes on the right hand side.
    It’s interesting to see that avoided deforestation has a far higher projected cost than low and medium cost forestation initiatives. This seems like a case where the preferred options would shift if one supplemented reasoning based on cost-effectiveness with consideration of the ‘value’ of biodiversity in those forests. Presumably there is also a case to be made that avoided deforestation provides quicker and more certain carbon reductions than forestation, and might thereby be preferable despite the higher cost.

  3. Citing Poor Conditions, China Refuses To Send Delegation To Olympics

    BEIJING—In an 11th-hour move that shocked the international athletic and political communities alike, the Chinese Olympic Team announced Wednesday that it will not be attending the XXIX Olympiad in Beijing due to “shocking, shameful, and ultimately dangerous environmental conditions” in the host city.

    “Given the unconscionably bad environmental state of the area in and around the site of the 2008 Summer Games, we cannot in good conscience allow Chinese athletes to compete in China,” said Olympic committee spokesman Sun Weide. “We deeply apologize to China for the bitter disappointment they will feel at not being represented in these Games. However, we place the blame squarely on China for their failure to prepare a suitable venue for international competition.”

  4. I think you mean that the options on the left (not right) side are projected to save money


  5. Not sure how they calculate the biodiesel cost on the right. That must factor in a crop-based system that has food or other implications. Many people erroneously associate diesel with crops, when other more sensible options exist already.

    An algae or even a waste-oil based system ends up with many benefits, not costs. For example, a sugarcane biofuel that is on the left side of your chart would require 46-57 percent of existing US crop land to meet just half of the current US fuel demand. Moreover, ethanol based fuel systems are far less efficient. A FlexFuel vehicle that uses ethanol will get approximately 50% of its gasoline mileage — that’s 8mpg for a FlexFuel Tahoe. Algae, on the other hand, would require just 1-2 percent of existing crop land. The technology for algae is new, but so are the technologies in air-conditioning, lighting, heating, etc.. The latest BluTech engines are a marvel of diesel engineering, providing 50mpg+ for large luxury sedans and 30mpg+ for trucks and vans.

    Thus, ironically, the fuel efficiency in commercial vehicles really points back to diesel. And diesel points back to bio-based sources for cleaner burning and less costly production.

  6. ECONOMICS: New McKinsey study finds emissions problem tougher, but still manageable (01/26/2009)
    Jessica Leber, E&E reporter

    The world can indeed cut greenhouse gases by 2030 to levels low enough to rein in global warming to reasonable amounts, according to a study released today by consulting firm McKinsey & Co.

    The report, “Pathways to a Low-Carbon Economy,” is a sequel to the firm’s 2007 greenhouse gas abatement cost curve, which made a big splash when it was released by concluding that cutting emissions could cost almost nothing over the long term.

    Today’s “Version 2” identifies more than 200 options for abating a total of 47 of the 70 gigatons of carbon emissions that the International Energy Agency (IEA) projects will be released by 2030 under a business-as-usual scenario.

    This would be enough, the report concludes, to keep climate warming below 2 degrees Celsius, a key threshold for avoiding dangerous impacts, according to the Intergovernmental Panel on Climate Change.

    But finding the will to achieve the immense scale of these reductions in time is another story. “A 10-year delay in taking abatement action would make it virtually impossible,” the report says.

  7. The study’s authors estimate that the investment requirements for making these reductions add up to annual costs of €810 billion ($1.04 trillion) by 2030, but that much of those costs can be regained through energy savings. In an ideal world that employed the most effective carbon reduction measures, the net costs of saving the world from climate change would be not so horrific — likely adding up to less than 1 percent of the global gross domestic product.

    The new study goes deeper than the 2007 version, said Ed Petter, a McKinsey spokesman. Based on 10 national studies the firm has conducted in the last 18 months, the report also takes into account regional differences in the opportunities for and costs of creating a low-carbon world.

    But the most important change is that the IEA’s “business-as-usual” baseline for emissions has grown from 60 to 70 gigatons of carbon by 2030. “China and India are going to grow much faster than they thought,” said Petter. This time, he said, there are an extra 10 gigatons to mop up.

  8. So I was excited and delighted to be invited by The German Marshall Fund to be the respondent for a roundtable discussion Monday in DC (details below) on their updated cost-curve, which I have an early glimpse of for Climate Progress readers [click to enlarge]:

    Nobody has as detailed a set of “bottom up” numbers as McKinsey — though I certainly have some issues with their work. Too little concentrated solar thermal power — and it is not a little cheaper than PV, it’s a lot bigger.

  9. Cost of the Clean Transition? “Barely Noticeable”
    by Tzeporah Berman

    New Scientist has run the numbers on what it’s going to cost consumers to have a clean energy transition and the results are “barely noticeable” for folks in the UK. Coincides with similar studies in the US. No easy solution yet for flying but in almost all other areas the data shows that fears about destroying the economy are wild fearmongering:

    “a new modelling exercise conducted exclusively for this magazine suggests that these fears are largely unfounded. It projects that radical cuts to the UK’s emissions will cause barely noticeable increases in the price of food, drink and most other goods by 2050 (see the figures). Electricity and petrol costs will rise significantly, but with the right policies in place, say the modellers, this need not lead to big changes in our lifestyle.”

  10. A similar approach, popular in climate circles for the past decade or so, is to consider the marginal costs of abatement. Like green premiums, these compute the costs of a climate intervention (including operating costs and upfront spending). But it compares them with the emissions that the policy is expected to abate. Plotting the costs and emissions abated on a curve shows the policies that provide the most bang for the buck.

    Such curves have been computed by a number of forecasters over the years, including McKinsey and the Boston Consulting Group, two consultancies; Goldman Sachs, a bank; and Britain’s Climate Change Commission, which advises Parliament. As a rule, most show that the biggest bang comes from making buildings more energy-efficient, say by installing insulation or smart cooling and heating systems. Often these have negative costs: analysts think they will eventually save consumers money through cheaper bills.

    The next-best bang for the buck tends to be replacing power plants that burn natural gas or coal with renewable-powered ones. There is less agreement about what the next-best option is after that. But the most expensive areas of the economy to decarbonise tend to be transport (planes and ships), heavy industry (steel and cement) and agriculture (cows belching methane). In these cases clean, cheap, scalable alternatives do not yet exist.

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