29-11-07

The US could reduce projected 2030 emissions of greenhouse gases by one-third to one-half at a "manageable" cost to the economy and without requiring big changes in consumer lifestyles, according to a report issued by management consultant McKinsey & Company and The Conference Board, a business research organization.
The report, "Reducing US Greenhouse Gas Emissions: How Much at What Cost?" was based on an analysis of 250 opportunities for reducing emissions of carbon dioxide and other gases believed to contribute to global warming.

The report said that based on government forecasts, US annual GHG emissions will rise 35 % to 9.7 bn tons of CO2 equivalent in 2030 if no new mitigation actions are adopted. At this level, emissions would overshoot by 3.5 bn to 5.2 bn tons the targets currently implied by economy-wide climate change bills introduced in the US Congress.
The McKinsey-Conference Board report said a reduction of 3.0 bn to 4.5 bn tons in 2030 is achievable at "manageable cost using proven and emerging high-potential technologies -- but only if the US pursues a wide array of options and moves quickly to capture gains from energy efficiency."

"Almost 40 % of the opportunity for greenhouse gas reduction identified comes from options that more than pay for themselves over their lifetimes, thereby creating net savings for the economy," the report said, adding that improving energy efficiency in buildings, appliances and industry could, for example, "yield net savings while offsetting some 85 % of the projected incremental demand for electricity in 2030."
But the report warned that "private sector innovation and policy support will be necessary to unlock these and other opportunities. Without forceful and coordinated action it is unlikely that even the most economically beneficial options would realize their full potential," Ken Ostrowski, a McKinsey director, said.

McKinsey said its analysis focused on options likely to yield greenhouse gas reductions at a cost of less than $50/tons of CO2e. The report found, among other things, that "opportunities to reduce greenhouse gas emissions are highly fragmented and widely spread across the economy."
The study said a single option -- carbon capture and storage from coal-fired power plants -- offers less than 11 % of total potential identified. The largest sector, power generation, accounts for less than one-third of the total potential reductions, the report added.

In addition, the report said that cutting emissions by 3 bn tons of CO2e in 2030 would require $ 1.1 tn of additional capital spending, or roughly 1.5 % of the $ 77 tn in real investment the US economy is expected to make over this period.
The study said investment would need to be higher in the early years to capture energy efficiency gains at lowest overall costs and accelerate the development of key technologies, and would be highly concentrated in the power and transportation sectors. Such investment, the report continued, would "likely put upward pressure on electricity prices and vehicle costs."

The study also said that "five clusters of initiatives, pursued in unison, could create substantial progress towards the targets implied by bills currently before Congress. From least to highest average cost, they are:
-- improving energy efficiency in buildings and appliances (710-870 mm tons);
-- increasing fuel efficiency in vehicles and reducing carbon intensity of transportation fuels (340-660 mm tons);
-- pursing various options across energy-intensive portions of the industrial sector (620-770 mm tons);
-- expanding and enhancing carbon sinks, such as forests (440-590 mm tons) and
-- reducing the carbon intensity of electric power production (800-1,570 mm tons).

McKinsey and The Conference Board said the report was produced in association with DTE Energy, Environmental Defence, Honeywell, National Grid, Natural Resources Defence Council, Pacific Gas & Electric and Shell.