Pathways to a Low Carbon Economy
Version 2 of the Global GHG Abatement Cost Curve
CEPS
Brussels, July 8, 2009
Full report available at
http://climatedesk.bymckinsey.com
Setup of the research
Sponsors
Academic Review Panel
• Nicholas Stern
London School of Economics
• Bert Metz
IPCC
• Jayant Sathaye
Berkeley
• Fatih Birol
IEA
• Jiang Kejun
ERI China
• Steve Pacala
Princeton University
• Ritu Mathur
TERI India
• Mikiko Kainuma
NIES Japan
Key findings global GHG abatement cost curve v2.0
• There is sufficient abatement potential to contain global warming
below 2°C with high probability
• Global and cross-sector action is essential to capture the opportunity
• Costs and financing look manageable, but is likely challenging in some
sectors and regions
• Time is of the essence, and the value of early investment is high
Possible to contain global warming below 2°C
Peak at 550 ppm, 3.0°C
Peak at 510 ppm, 2.0°C
Peak at 480 ppm, 1.8°C
Global GHG emissions
GtCO2e per year
70
70
Current pathway /
Business-as-usual
60
-38
50
Technical measures
< €60 per tCO2e
Focus of the study
40
30
32
-9
20
23
10
0
2005
2010
2015
2020
2025
2030
Additional measures
Behavioral changes &
expensive measures
Three major categories of technical abatement opportunities complemented by
behavioral change
Global GHG emissions
GtCO2e per year
70
70
Business-as-usual
-14
Energy efficiency
60
50
40
30
-12
Low carbon
energy supply
-12
Terrestrial carbon
(forestry, agriculture)
-5
Technical measures
€60–100 per tCO2e
- 4
23
20
10
0
2005
10
15
20
25
2030
* The estimate of behavioral change abatement potential was made after implementation of all technical levers;
the potential would be higher if modeled before implementation of the technical levers.
Source: Global GHG Abatement Cost Curve v2.0; Houghton; IEA; US EPA
Behavior changes*
Technical
measures
< €60/tCO2e
(Focus of
the study)
Global GHG abatement cost curve beyond business-as-usual – 2030
Abatement cost
€ per tCO2e
60
50
40
Low penetration wind
Cars plug-in hybrid
Residential electronics
Degraded forest reforestation
Residential appliances
Nuclear
Pastureland afforestation
Retrofit residential HVAC
30
20
10
Degraded land restoration
Tillage and residue mgmt
Insulation retrofit (residential)
2nd generation biofuels
Gas plant CCS retrofit
Coal CCS retrofit
Iron and steel CCS new build
Coal CCS new build
Power plant biomass
co-firing
Reduced intensive
agriculture conversion
High penetration wind
Solar PV
Solar CSP
Building efficiency
new build
Cars full hybrid
Waste recycling
0
-10
5
10
15
-30
-50
-60
30
Geothermal
Grassland management
Reduced pastureland conversion
Reduced slash and burn agriculture conversion
-20
-40
20
25
Organic soil restoration
Small hydro
1st generation biofuels
Rice management
Efficiency improvements other industry
Electricity from landfill gas
-70
-80
-90
-100
Clinker substitution by fly ash
Cropland nutrient management
Motor systems efficiency
Insulation retrofit (commercial)
Lighting – switch incandescent to LED (residential)
Note: The curve presents an estimate of the maximum potential of all technical GHG abatement measures below €60 per tCO2e if each
lever was pursued aggressively. It is not a forecast of what role different abatement measures and technologies will play.
Source: Global GHG Abatement Cost Curve v2.0
35
38
Abatement potential
GtCO2e per year
Global and cross-sectoral action required to capture full potential
Abatement potential; GtCO2e per year; 2030
By sector
By region
10.0
Power
North America
Petroleum & Gas
1.1
Western Europe
Cement
1.0
Eastern Europe
Iron & Steel
1.5
OECD Pacific
Chemicals
2.0
Latin America
Other Industry
1.7
Rest of developing Asia
Transport
3.2
Africa
Buildings
3.5
China
Waste
1.5
India
7.8
Forestry
4.6
Agriculture
Total
38
5.1
3.2
1.9
1.4
4.5
5.7
2.8
8.4
2.7
Middle East
1.4
Air & Sea Transport
0.8
Total
38
Investments manageable at the global level, but could be challenging in some
sectors
€ billions per year; 2030; in addition to current projected / business as usual investments
By sector
By region
Petroleum & Gas
Cement
North America
148
Power
18
Western Europe
6
35
40
34
OECD Pacific
Chemicals
27
Latin America
Other Industry
28
Rest of developing Asia
Transport
300
Waste
198
Forestry
Agriculture
Total
Africa
43
0
810
52
70
35
China
India
8
102
Eastern Europe
Iron & Steel
Buildings
140
211
61
Middle East
34
Air & Sea Transport
31
Total
810
Significant value in investing early
Peak at 550 ppm, long-term stabilization 550 ppm
Peak at 510 ppm, long-term stabilization 450 ppm
Peak at 480 ppm, long-term stabilization 400 ppm
Global GHG emissions
GtCO2e per year
Lost abatement opportunity
70
60
-22
Potential emission
48 development
if starting in 2020*
50
40
Potential emission
32 development
if starting in 2010*
30
20
10
0
2005
10
15
20
25
2030
* Technical levers <€60/tCO2e
Source: Global GHG Abatement Cost Curve v2.0; Houghton; IEA; OECD; EPA; den Elzen; van Vuuren, Meinshausen
Illustration of CO2e intensity development by abatement lever group –
Cement industry
Kg CO2e per tonne cement; Global average
785
29
756
95
-23%
51
3
607
41
2005
BAU
2030
Increased Increased Waste
2030 after CCS
average evolution business- clinker
alterheat
conventional
as-usual substinative
recovery abatement
tution
fuels
Source: Global GHG Abatement Cost Curve v2.0
-28%
566
2030
emissions
after
abatement
Carbon intensity of oil and gas production is influenced by a variety factors
Downstream
Upstream
1
Type of field
• Conventional vs non-
•
2
Maturity
conventional oil fields, e.g.
– Oil with API lower than 10
– Tar sands
Gas fields vs oil fields
1
Regional
characteristics
• Crude slate
• Fuel specifications
• Emissions specifications
Regional
practices
• Costs of energy
• Fuel used to power refinery
2
• Water content
• Reservoir pressure
3
Refinery
complexity
3
Associated
gas or oil
4
Operator
excellence
• Ratio of oil produced vs
gas produced in the same
timeframe
• Technology application
• Regional practices
– Costs of energy
– Environmental
awareness
Source: GHG abatement cost curve 2.0 team
4
Size
5
Operator
excellence
• Types of units present
in refinery, i.e. FCC, Coker,
Visbreaker
• Ability to leverage
economies of scale
• Operators of refineries
have different policies with
regards to energy efficiency
and GHG emissions
Thank you for your attention!
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