The fixation with the development of potentially ground breaking low carbon technologies has understandably become a central feature of the climate change debate, but according to a major new report from management consultancy McKinsey the clean tech rush is in danger of obscuring the effectiveness of many existing technologies that could provide a far more cost effective means of tackling global warming.
The new study - entitled A Cost Curve for Greenhouse Gas Reduction – provides a comprehensive assessment of the potential cost of reducing carbon emissions across a wide range of different sectors and stabilising the atmosphere at 450 parts of greenhouse gases per million (ppm) by 2030 – a level scientists estimate will result in a global temperature increase of 2 degrees above pre-industrial levels.
The report finds that 70 percent of possible greenhouse gas emissions abatements that could be achieved at a cost of less than €40 a tonne would not depend on any major technical advancements. It claims that such "low tech" emission reduction measures "either involve very little technology (for example, those in forestry or agriculture) or rely primarily on mature technologies, such as nuclear power, small-scale hydropower, and energy efficient lighting". It adds that: "The point is not that technological R&D has no importance but rather that low tech abatement is important in a 2030 perspective."
The study also includes a cost curve graph assessing the different abatement measures currently under consideration and concludes that "low tech" measures such as better building insulation, avoiding deforestation, and more energy efficient lighting, heating, electrical appliances and vehicles, are far more cost effective than the headline grabbing renewable energy projects promoted by many western governments.
For instance, the curve shows that while it would cost close to €40 per tonne of greenhouse gas emissions saved to retrofit carbon capture systems to coal fired power stations, installing building insulation would have no net cost and actually boost the global economy by over €150 for each tonne of emissions saved.
The report argues that to stabilise at 450ppm the global economy would have to exploit all the available abatement potential that costs up to €40 per tonne, including carbon capture and sequestration technologies. But McKinsey analysts have claimed that the focus of climate change policy on the energy sector is disproportionate and that many zero cost measures are being largely ignored.
For example, the study claims that improving the energy efficiency of buildings and vehicles would have a zero or negative net lifecycle cost and could account for a quarter of the total abatement potential that could be achieved at a cost of €40 per tonne or less.
Meanwhile, of those carbon emission reduction measures that would have some net cost 35 percent come from the forestry sector, 28 percent from manufacturing, and only 25 percent from the power sector. A further six percent each could be accounted for with changes to agriculture and transport.
Encouragingly, the report concludes that if the global economy was able to exploit all the carbon emission reduction measures that it estimates would cost less than €40 per tonne then the cost to the global economy in 2030 of stabilising at 450ppm would be around €500bn, or just 0.6 percent of global GDP.
As the report points out this is considerably less than the 3.3 percent of global GDP accounted for by the insurance industry – a relevant comparison given some environmentalists regard reducing emissions as a form of insurance against future disaster.
What is staggering about the report is not the scale of the changes to the global economy required if we are to curb global warming – anyone with any interest in the economics of climate change already knows that a) the changes required will be massive and b) they are surprisingly affordable in the grand scheme of things – but the fact that so many climate change initiatives from both governments and businesses are eschewing the most cost effective initiatives in favour of more complex and costly measures.
When something as simple as building insulation can deliver a significant reduction in carbon emissions at no net cost it is hard to comprehend why governments are not ploughing a huge swathe of their budgets earmarked for climate change initiatives into ensuring the whole building stock is properly insulated.
It is surely human nature when faced with a daunting task to look for the easy wins first, but when it comes to climate change too often the opposite seems to be the case with much of the political, media and business focus drawn to expensive and in many cases theoretical solutions to the problem. As many other reports, including a study last year from McKinsey, have observed energy efficiency has become the ugly duckling of the green business movement - often ignored in favour of headline grabbing new technologies.
But with the task of developing a low carbon economy becoming ever more daunting and concerns over the cost of reducing carbon emissions only set to grow it is now more urgent than ever that business and political leaders begin to prioritise their climate change initiatives and start focusing on the energy efficiency projects that will deliver results quickest.
Ensuring building stock is properly insulated, car fleets are more efficient and the forestry industry is genuinely sustainable may not be as exciting as building wind farms and developing the next generation of solar panels. But it is these relatively simple measures that over the next five years must surely provide the foundation of any successful global climate change strategy.
Once that is done then maybe the political momentum and public support will be in place to deliver the expensive new technologies that must necessarily represent the second phase of any transition towards a low carbon economy.
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