U.S. Emissions Reductions May Be Cheaper Than Thought

UN Conference
Much of the discussion at the U.N. Climate talks in Bali revolves around the costs of mitigating greenhouse gas emissions.
Photo by David Steven via Flickr

For years, the United States has resisted mandatory reductions in greenhouse gas emissions because of the perceived cost to the national economy. But a new report suggests that significantly reducing U.S. carbon emissions could cost far less than the trillions of dollars some have projected. McKinsey & Co., a privately owned management consulting firm, predicts that making substantial emissions cuts may cost the economy only a few billion dollars, and that at least 40 percent of the reductions would actually bring economic savings.

This week, delegates at the United Nations climate change conference in Bali are struggling to build a post-Kyoto Protocol framework to reduce worldwide greenhouse gas emissions. But they face resistance from some of the world’s biggest emitters, China, India, and the United States. These countries are worried that their economies will suffer from imposed emissions caps.

Some models do predict heavy costs associated with reducing emissions. Last month, the U.S. Chamber of Commerce estimated that a new bill to restrict emissions currently being debated in the U.S. Congress would cost 3.4 million Americans their jobs. And William Nordhaus of Yale University calculates that slowing global warming would cost $20 trillion, according to Business Week.

But the McKinsey report argues that with a long-term model, costs are actually much lower. Supported by both energy companes and environmental groups, including Environmental Defense, Natural Resources Defense Council, Royal Dutch Shell, and Pacific Gas and Electric, the study finds that the United States could reduce its projected greenhouse gas emissions in 2030 by three to four-and-a-half gigatons using technology that is largely already in place. “Eighty percent of the reductions come from technology that exists today at the commercial scale,” according to McKinsey director Jack Stephenson. The other 20 percent is from technology that is currently being developed, such as plug-in hybrids and cellulosic biofuels.

The report predicts that mitigation efforts will cost less than $50 per ton of greenhouse gas emissions, or an amount in the tens of billions of dollars overall. One reason for the lower cost, explains Stevenson, is because the United States currently wastes large amounts of energy, and simple changes could make the country vastly more efficient. The McKinsey report acknowledges that there will be some short-term losses, and that different sectors of the economy will not be affected equally. But overall, the report is considered a more encouraging analysis than many. “It’s the difference between a business consultant who sees opportunities for business, and a hired-gun economist,” says Dan Lashof of the Natural Resources Defense Council.

This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.

A new report suggests that significantly reducing U.S. carbon emissions could cost far less than the trillions of dollars some have projected.