Reducing US Greenhouse Gas Emissions: How Much at What Cost?

Reducing US Greenhouse Gas Emissions: How Much at What Cost?

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Author: Corporate Authorship McKinsey
Publication Date: November 2007
Report Number: GHGreport

The United States could reduce projected 2030 emissions of greenhouse gases significantly with manageable costs and without requiring big changes in consumer lifestyles, concludes Reducing US Greenhouse Gas Emissions: How Much at What Cost?, a report published jointly by The Conference Board* and McKinsey & Company. The report is based on detailed analysis of 250 opportunities for reducing emissions of carbon dioxide and other gases thought to contribute to global warming. Analysis focused on options likely to yield greenhouse gas reductions at a cost of less than $50 per ton of CO2e.This report provides an excellent starting point for such a national conversation.

Among the main findings:

Opportunities to reduce greenhouse gas emissions are highly fragmented and widely spread across the economy. The largest single option — carbon capture and storage (CCS) for coal-fired power plants — offers less than 11 percent of total potential identified. The largest sector, power generation, accounts for less than one third of the total.

Reducing emissions by 3 gigatons of CO2e in 2030 would require $1.1 trillion of additional capital spending, or roughly 1.5 percent of the $77 trillion in real investment the U.S. economy is expected to make over this period.

Investment would need to be higher in the early years, in order 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.

If pursued, such investment would likely put upward pressure on electricity prices and vehicle costs. Policymakers would need to weigh these added costs against the energy efficiency savings, opportunities for technological advances, and other societal benefits.

* The Conference Board is a not-for-profit, non-advocacy, research and educational institution and, as such, does not take positions on matters of public policy. For this reason, we do not associate ourselves with the policy implications discussed in this report. The Conference Board, which was not involved in the original research underlying this report, was founded on the principle that fact-based analysis and debate will produce constructive changes in the U.S. economy and the health and prosperity of the free enterprise system. We believe this report helps achieve those objectives and represents an important contribution toward establishing an empirical and analytical base for public discussion of carbon policies.

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