The United States could reduce projected 2030 emissions of greenhouse gases significantly with manageable costs and without requiring big changes in consumer lifestyles, concludes Reducing US Greenhouse Gas Emissions: How Much at What Cost?, a report published jointly by The Conference Board and McKinsey & Company.

The report is based on detailed analysis of 250 opportunities for reducing emissions of carbon dioxide and other gases thought to contribute to global warming. Analysis focused on options likely to yield greenhouse gas reductions at a cost of less than $50 per ton of CO2e.This report provides an excellent starting point for such a national conversation.

Preface:

Over the past 2 years, McKinsey & Company has worked with leading institutions and experts to develop a framework and fact base to understand the costs and potentials of different options for reducing greenhouse gas (GHG) emissions – first at a global level, then through country-specific analyses for major GHG-emitting nations.

In February 2007, we launched the U.S. Greenhouse Gas Abatement Mapping Initiative (US GHG AMI) in collaboration with leading U.S.-based companies and environmental nongovernmental organizations (NGOs). Our effort examined opportunities to reduce GHG emissions from human activity within U.S. borders using tested approaches and high-potential emerging technologies. This report is the product of that work.

Our project has been greatly strengthened and enriched by contributions from many participants. They helped our team gain access to data, test emerging conclusions, and prepare for the release of this report.

We especially acknowledge our environmental and corporate sponsors for providing their expertise, as well as contributing underwriting support for this effort:

¶ DTE Energy
¶ Environmental Defense
¶ Honeywell
¶ National Grid
¶ Natural Resources Defense Council
¶ PG&E
¶ Shell

In addition, we have been encouraged and challenged by our academic review panel, who provided important guidance throughout the project and later reviewed project findings prior to the publication of this report:

¶ Robert Socolow, Professor of Mechanical and Aerospace Engineering, Co-Director of the Carbon Mitigation Initiative, Princeton University, and Chair of the US GHG AMI’s Academic Review Panel.

¶ Dallas Burtraw, Senior Fellow, Resources for the Future.

¶ John Heywood, Professor of Mechanical Engineering, Director of the Sloan Automotive Laboratory, Massachusetts Institute of Technology.

¶ Bruce McCarl, Regents Professor of Agricultural Economics, Texas A&M University.

¶ Alan Meier, Lawrence Berkeley National Laboratory and University of California, Davis.

¶ Stephen Pacala, Professor of Biology, Director of Princeton Environmental Institute, Princeton University.

During this effort, the team conducted more than 100 interviews with representatives of government agencies, public and private companies, academic institutions and research foundations, as well as many independent experts. While too numerous to cite by name, these individuals have given generously of their time and knowledge and deserve our warmest thanks.

We are also grateful to our co-publishers, The Conference Board, for their able assistance in publishing and distributing this report.

While the work presented in “Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?” has benefited immensely from these contributions, the views it expresses are solely the responsibility of McKinsey & Company and do not necessarily reflect the views of our sponsors, academic reviewers, The Conference Board, or any of our other contributors.

Visit Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? McKinsey Website

Consensus is growing among scientists, policy makers and business leaders that concerted action will be needed to address rising greenhouse gas (GHG) emissions. The discussion is now turning to the practical challenges of where and how emissions reductions can best be achieved, at what costs, and over what periods of time.

Starting in early 2007, a research team from McKinsey & Company worked with leading companies, industry experts, academics, and environmental NGOs to develop a detailed, consistent fact base estimating costs and potentials of different options to reduce or prevent GHG emissions within the United States over a 25-year period. The team analyzed more than 250 options, encompassing efficiency gains, shifts to lower-carbon energy sources, and expanded carbon sinks.

Download Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?

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U.S. Greenhouse Gas Abatement Mapping Initiative
Executive Report
December 2007

Jon Creyts, Anton Derkach, Scott Nyquist, Ken Ostrowski, Jack Stephenson

Glossary:

Abatement. The purposeful reduction of greenhouse gas emissions or their rate of growth.

Abatement cost. The engineering and resource costs required to capture a specified abatement option. These costs include all capital, operations and maintenance costs, but exclude all social, welfare, and regulatory costs associated with realizing an opportunity. Where expressed as per-ton cost, the net discounted cost (including benefits) is divided by the total emissions reduction. Both are calculated over the lifetime of the measure.

Afforestation. The natural or human-induced spread of forest to previously unforested land, such as fields and pastures; contrasted with replantation of forest land after trees have been harvested, which is usually called “reforestation.”

Carbon sink. The process by which more carbon is absorbed than is released into the atmosphere. Land-based organic matter – mainly forests, but also agricultural lands and crops – constitute a significant carbon sink. (Oceans and other bodies of water can also serve as carbon sinks, but are not discussed as such in this report.)

Carbon stock. A pool of stored carbon. Land-based carbon stocks include forest stocks containing living and standing dead vegetation, woody debris and litter, and organic material in the soil, and harvested stocks consisting of wood for fuel and wood products, such as lumber and paper.

CCS. Carbon capture and storage, the processes by which carbon dioxide is captured from the combustion of fossil fuels, prepared for transportation, moved and delivered to a storage site, and permanently stored to prevent its release into the atmosphere.

CHP. Combined heat and power, also known as “co-generation,” the use of a heat engine or a power station to generate electricity and steam from a single fuel at a facility near the consumer.

CO2e. Carbon-dioxide equivalent, a standardized measure of greenhouse gas emissions developed to account accurately for the differing global warming potentials of the various gases. Emissions are measured in metric tons of CO2e per year, usually in millions of tons (megatons) or billions of tons (gigatons).

Consumer utility. Functionality or usefulness for people, such as level of comfort. Adjusting a thermostat, moving to a smaller house, driving a smaller vehicle, or driving fewer miles annually represent changes in consumer utility. In a strict economic sense, maintaining constant consumer utility assumes a constant economic surplus for the consumer while delivering against a common benefit.

CTL. Coal-to-liquids, the chain of chemical processes for converting coal to liquid hydrocarbons for transportation fuels, usually diesel fuel.

EOR. Enhanced oil recovery, the process of improving the productivity of oil wells by injecting

CO2 into the well.

GHG. Greenhouse gases, the major ones being:

• CO2 – carbon dioxide
• CH4 – methane
• N2O – nitrous oxide
• CFCs – chlorofluorocarbons
• HFCs – hydrofluorocarbons
• PFCs – perfluorocarbons
• SF6 – sulfur hexafluoride.

Gigaton. 1 billion metric tons.

HVAC. Heating, ventilation, and air conditioning: climate-control systems for commercial and residential buildings.

IGCC. Integrated Gasification Combined Cycle, an advanced design for higher-efficiency power plants that generate and burn synthetic gas from coal, heavy petroleum residues, or biomass.

Megaton. 1 million metric tons.

Reference case. The projection of U.S. greenhouse gas emissions for 2005 through 2030, which was constructed from U.S. government sources and serves as the baseline against which abatement volumes are measured. This report uses the “reference” scenario in the U.S. Energy Information Administration’s Annual Energy Outlook 2007 report as the foundation of the reference case for emissions through 2030. That scenario has been supplemented with data from Environmental Protection Agency and Department of Agriculture sources, as referenced in the report. Our analyses excluded HCFCs, which are being retired under the Montreal Protocol.

SEER. Seasonal energy efficiency ratio, the rating system for air conditioners: higher SEER numbers indicate greater efficiency. The federal minimum standard for residential air conditioners (except window units) is 13 SEER.

Wind class. The 1-to-7 scale (low to high) developed by National Renewable Energy Laboratory to describe power contained in wind. Class 5 to 7 winds represent reasonably gusty areas with mean wind speeds between 13.4 and 21.1 mph at 33 feet above the ground.

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