McKinsey & Company has just released a new study outlining the potential costs of climate change mitigation. The report, which revises work originally published in 2007, evaluates 200 greenhouse gas abatement opportunities across 10 sectors and 21 world regions. It concludes that greenhouse gas emissions reductions of 35-40% below 1990 levels by 2030 are achievable for an annual cost of $260 to 450 billion – or less than 1 percent of forecasted global gross domestic product in 2030. According to the IPCC, these reductions would be sufficient to keep average global temperatures below the 2°C threshold.
Achieving such reductions won’t be easy, of course. Accomplishing the goal would require us to sell 42 million hybrid vehicles; reforest land equivalent to the size of India and avoid deforestation on another 170 million hectares; and increase the world’s relative share of low-carbon electricity from 30% to 70%. All told, the plan would involve an increase in annual global carbon productivity gains from roughly 1.2% to 5-7%.
Not surprisingly, McKinsey believes the best way to do this is to increase the energy efficiency of vehicles, buildings, and industrial equipment; shift to low-carbon energy alternatives such as wind, nuclear, hydro, and CCS; and increase terrestrial sinks. Importantly, the report also breaks abatement opportunities down by sector, laying out the specific measures – and potential costs – associated with emission reductions in industries including transport, power, petroleum, agriculture, and waste. In doing so, McKinsey’s report serves as a detailed how-to guide to building a low-carbon economy.
If this isn’t enough to make you want to read it, I should stress that it has a lot of great graphics. Also, considering the ubiquity of McKinsey’s 2007 greenhouse gas abatement curve, I expect this one will make a bit of a splash as well.