How to Cut Carbon Emissions and Save Money

McKinsey & Company is a management consulting firm. In 2010 they released this ‘carbon abatement cost curve’ for the whole world:

Click it to see a nice big version. So, they’re claiming:

By 2030 we can cut CO2 emissions about 15 gigatonnes per year while saving lots of money.

By 2030 can cut CO2 emissions by up to 37 gigatonnes per year before the total cost—that is, cost minus savings—becomes positive.

The graph is cute. The vertical axis of the graph says how many euros per tonne it would cost to cut CO2 emissions by 2030 using various measures. The horizontal axis says how many gigatonnes per year we could reduce CO2 emissions using these measures.

So, we get lots of blue rectangles. If a rectangle is below the horizontal axis, its area says how many euros per year we’d save by implementing that measure. If it’s above the axis, its area says how much that measure would cost.

I believe the total blue area below the axis equals the total blue area above the axis. So if we do all these things, the total cost is zero.

37 gigatonnes of CO2 is roughly 10 gigatonnes of carbon: remember, there’s a crucial factor of 3\frac{2}{3} here. In 2004, Pacala and Socolow argued that the world needs to find ways to cut carbon emissions by about 7 gigatonnes/year by 2054 to keep emissions flat until this time. By now we’d need 9 gigatonnes/year.

If so, it seems the measures shown here could keep carbon emissions flat worldwide at no net cost!

But as usual, there are at least a few problems.

Problem 1

Is McKinsey’s analysis correct? I don’t know. Here’s their report, along with some others:

• McKinsey & Company, Impact of the financial crisis on carbon economics: Version 2.1 of the global greenhouse gas abatement cost curve, 2010.

For more details it’s good to read version 2.0:

• McKinsey & Company, Pathways to a low carbon economy: Version 2 of the global greenhouse gas abatement cost curve, 2009.

They’re free if you fill out some forms. But it’s not easy to check these things. Does anyone know papers that try to check McKinsey’s work? I find it’s more fun to study a problem like this after you see two sides of the same story.

Problem 2

I said ‘no net cost’. But if you need to spend a lot of money, the fact that I’m saving a lot doesn’t compensate you. So there’s the nontrivial problem of taking money that’s saved on some measures and making sure it gets spent on others. Here’s where ‘big government’ might be required—which makes some people decide global warming is just a political conspiracy, nyeh-heh-heh.

Is there another way to make the money transfer happen, without top-down authority?

We could still get the job about half-done at a huge savings, of course. McKinsey says we could cut CO2 emissions by 15 gigatonnes per year doing things that only save money. That’s about 4 gigatonnes of carbon per year! We could at least do that.

Problem 3

Keeping carbon emissions flat is not enough. Carbon dioxide, once put in the atmosphere, stays there a long time—though individual molecules come and go. As the saying goes, carbon is forever. (Click that link for more precise information.)

So, even Pacala and Socolow say keeping carbon emissions flat is a mere stopgap before we actually reduce carbon emissions, starting in 2054. But some more recent papers seem to suggest Pacala and Socolow were being overly optimistic.

Of course it depends on how much global warming you’re willing to tolerate! It also depends on lots of other things.

Anyway, this paper claims that if we cut global greenhouse gas emissions in half by 2050 (as compared to what they were in 1990), there’s a 12–45% probability that the world will get at least 2 °C warmer than its temperature before the industrial revolution:

• Malte Meinshausen et al, Greenhouse-gas emission targets for limiting global warming to 2 °C, Nature 458 (2009), 1158–1163.

Abstract: More than 100 countries have adopted a global warming limit of 2 °C or below (relative to pre-industrial levels) as a guiding principle for mitigation efforts to reduce climate change risks, impacts and damages. However, the greenhouse gas (GHG) emissions corresponding to a specified maximum warming are poorly known owing to uncertainties in the carbon cycle and the climate response. Here we provide a comprehensive probabilistic analysis aimed at quantifying GHG emission budgets for the 2000–50 period that would limit warming throughout the twenty-first century to below 2 °C, based on a combination of published distributions of climate system properties and observational constraints. We show that, for the chosen class of emission scenarios, both cumulative emissions up to 2050 and emission levels in 2050 are robust indicators of the probability that twenty-first century warming will not exceed 2 °C relative to pre-industrial temperatures.

Limiting cumulative CO2 emissions over 2000–50 to 1,000 Gt CO2 yields a 25% probability of warming exceeding 2 °C—and a limit of 1,440 Gt CO2 yields a 50% probability—given a representative estimate of the distribution of climate system properties. As known 2000–06 CO2 emissions were 234 Gt CO2, less than half the proven economically recoverable oil, gas and coal reserves can still be emitted up to 2050 to achieve such a goal. Recent G8 Communiques envisage halved global GHG emissions by 2050, for which we estimate a 12–45% probability of exceeding 2 °C—assuming 1990 as emission base year and a range of published climate sensitivity distributions. Emissions levels in 2020 are a less robust indicator, but for the scenarios considered, the probability of exceeding 2 °C rises to 53–87% if global GHG emissions are still more than 25% above 2000 levels in 2020.

This paper says we’re basically doomed to suffer unless we revamp society:

• Ted Trainer, Can renewables etc. solve the greenhouse problem? The negative case, Energy Policy 38 (2010), 4107–4114.

Abstract: Virtually all current discussion of climate change and energy problems proceeds on the assumption that technical solutions are possible within basically affluent-consumer societies. There is however a substantial case that this assumption is mistaken. This case derives from a consideration of the scale of the tasks and of the limits of non-carbon energy sources, focusing especially on the need for redundant capacity in winter. The first line of argument is to do with the extremely high capital cost of the supply system that would be required, and the second is to do with the problems set by the intermittency of renewable sources. It is concluded that the general climate change and energy problem cannot be solved without large scale reductions in rates of economic production and consumption, and therefore without transition to fundamentally different social structures and systems.

It’s worth reading because it uses actual numbers, not just hand-waving. But it seeks much more than keeping carbon emissions flat until 2050; that’s one reason for the dire conclusions.

It’s worth noting this rebuttal, which says that everything about Trainer’s paper is fine except a premature dismissal of nuclear power:

• Barry Brook, Could nuclear fission energy, etc., solve the greenhouse problem? The affirmative case, Energy Policy, available online 16 December 2011.

To get your hands on Brook’s paper you either need a subscription or you need to email him. You can do that starting from his blog article about the paper… which is definitely worth reading:

• Barry Brook, Could nuclear fission energy, etc., solve the greenhouse problem? The affirmative case, BraveNewClimate, 14 January 2012.

According to Brook, we can keep global warming from getting too bad if we get really serious about nuclear power.

Of course, these three papers are just a few of many. I’m still trying to sift through the information and figure out what’s really going on. It’s hard. It may be impossible. But McKinsey’s list of ways to cut carbon emissions and save money points to some things we start doing right now.

5 Responses to How to Cut Carbon Emissions and Save Money

  1. David Kline says:

    There are lots of critiques of so-called “marginal abatement curves” like McKinsey’s. One can be found here:

    The last point in the following extract from their abstract is for me the most telling: the lack of transparency.

    Legal commitments to reduce CO2 emissions require policy makers to find cost-efficient means to meet these obligations. Marginal abatement cost (MAC) curves, which illustrate the economics associated with climate change mitigation, have recently attracted a great amount of attention. A number of limitations with MAC curves are explained by the implication they should be just one tool in a broader set of decision-making aids used in assessing climate policy. MAC curves, for example, omit ancillary benefits of greenhouse gas emission abatement, treat uncertainty in a limited manner, exclude intertemporal dynamics and lack the necessary transparency concerning their assumptions.

  2. Short bloke. says:

    I live on the Atherton Tablelands of North Queensland and for the last three years we have had very little summer weather due to a light cloud cover, in fact some nights the air becomes quite cold. It would appear that the great thermostats, the oceans, react quite aggressively to less than one degree of temperature change. Approximately ten to twelve years ago we struggled to keep our small patch of lawn grass alive because our spring supplying our house water had been reduced to a trickle. The general colour in the entire airier of North Queensland was brown. Now with plentiful rain, the colour is emerald green covering most of Australia due to rapid lush growth. The difference in growth must be having quite an influence as to how long CO2 stays in the atmosphere.

  3. peter2108 says:

    You sometimes say “we” need to do things. But who is this person? Obligations are laid upon “us” but the states in the eurozone cannot even fix their currency, the Canadians seem to have bailed out of Kyoto, the Chinese have their own climate scientists and anyway are cursed by old fashioned pollution, the Indians – well I don’t know about them. The Austalians who inhabit a large and largely uninhabitable chunk of land are pretty passionate about climate chnage (in various directions). But there is no “we” because there is no single demos, people, state, corresponding to everywhere on Earth.

    • John Baez says:

      “We” means you. Yes, you have limited powers—but you should use those powers as best you can to get the job done.

      (Or not, if you disagree with my recommendations.)

  4. sidd says:

    I don’t trust McKinsey. One option I calculated and installed is insulation. In my clime. this made even more sense than efficient lighting, altho i did that too. I crawled in my ceiling and laid outta buncha fiberglass, and it paid off in one year of HVAC electric + natgas bills. Wear a hardhat, scalp gashes from nails are painful and bleed heavily. And mask,gloves,long sleeves. Do the work when temps up there not extreme. A rake helps. Or just pay someone to do.


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