The cost of reducing US greenhouse gas emissions

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The US needs “strong, coordinated, economy-wide action” in the form of a comprehensive abatement programme to prevent a sharp increase in greenhouse gas emissions (GHGs), a recent study by McKinsey suggests.

Annual GHG emissions in the US are projected to rise from 7.2 gigatons in 2005 to 9.7 gigatons in 2030 – an increase of 35% – according to a US government analysis cited by McKinsey. Moreover, growth in emissions would be accompanied by a gradual decrease in the absorption of carbon by US forests and agricultural land. 

Continued expansion of the US economy, rapid growth in the buildings-and-appliances and transportation sectors and increased use of carbon-based power for electricity generation are seen as the main drivers of projected emissions growth, according to McKinsey. 

In 2030, this would lead to a situation whereby the US exceeds the GHG emissions reduction targets contained in the economy-wide climate change bills currently before Congress by up to 5.2 gigatons, the study predicts. 

The US could reduce CO2 emissions by up to 4.5 gigatons by 2030 by using a comprehensive abatement programme and high-potential emerging technologies, at a marginal cost of less than €50 per ton, while maintaining comparable levels of consumer utility, the study points out. 

The McKinsey study suggests that the abatement programme be built on three principal actions: 

  • Stimulate action through a portfolio of strong, coordinated policies to capture GHG, reductions efficiently across industry sectors and geographies;
  • Pursue energy efficiency and negative-cost options quickly; and; 
  • Accelerate development of a low-carbon energy infrastructure. 

McKinsey highlight five “clusters of initiatives” which offer large abatement potential: 

  • Improving energy efficiency in buildings and appliances. Potential for savings: up to 870 megatons. 
  • Increasing fuel efficiency in vehicles and reducing carbon intensity of transportation fuels with potential savings of up to 660 megatons. Generating this potential is highly dependent on innovation rates and near-term commercialisation of lower-carbon fuel technologies. 
  • Pursuing various options across energy-intensive portions of the industrial sector. Saving potential here: Up to 770 megatons. 
  • Expanding and enhancing carbon sinks. This option alone, which would require the planting of new forests, could lead to a reduction of up to 590 megatons.
  • Reducing the carbon intensity of electric power production. This option derives from a shift towards renewable energy sources (primarily wind and solar), additional nuclear capacity, improved efficiency of power plants, and eventual use of carbon capture and storage (CCS) technologies for coal-fired electricity generation. 

Among the five options, the first one is cheapest from a societal point of view, but barriers to market efficiency will need to be overcome. The last option promises the greatest potential savings – up to 1,570 megatons – but it is also considered to be the most-capital intensive option with the longest lead time. 

The study concludes that without such a “forceful and coordinated set of actions, it is unlikely that even the most economically beneficial options would materialise”.

A concerted, nationwide effort to reduce GHG emissions – accompanied by new technologies, products, processes and methods – could well offer additional abatement potential and lower overall costs” and “will undoubtedly stimulate new businesses and economic opportunities”, it adds. 

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