Global GHG Abatement Cost Curve

Quantitative analysis was conducted by McKinsey & Co. of ten leading global companies and organisations to assess over 200 GHG abatement opportunities across 10 sectors and 21 world regions between 2009 and 2030. The results comprise an in-depth evaluation of the potential, costs and investment required for each of those measures.

The graph is a response to the discussion over the technical and economic feasibility of different target levels, what emission reduction opportunities should be pursued, and the costs of different options for meeting the targets. The graph shows the opportunities grouped into three categories of technical measures: energy efficiency (low abatement cost), low–carbon energy supply, and terrestrial carbon (high abatement cost).

Global GHG abatement cost curve beyond business as usual

Global GHG abatement cost curve beyond business as usual

Strategic investments and the key business case objectives for energy efficiency have been described as follows:

Company reputation may be at risk as there is increasing global attention on organisation’s sustainability commitment and actions. Action will enhance BRAND IMAGE and may lead to REWARD AND REBATES.

Rising energy costs and fuel costs will place pressure on organisation profitability. Government rebates on energy efficiency initiatives could be capitalised. Action will improve PROFITABILITY and lead to BOTTOM LINE SAVINGS.

Energy regulations from regulators, community groups and customer sensitivity will induce REGULATORY PREROGATIVES. Actin will ensure REGULATORY COMPLIANCE.

Increase competition and need to DIFFERENTIATE. Action to innovate to sustain will be necessary to achieve DESIGN INNOVATION.

Overall, capturing all the potential will be a major challenge: it will require change on a massive scale, strong global cross-sectoral action and commitment, and a strong policy framework. While the costs and investments seem manageable at a global level, they are likely to be challenging for individual sectors.

 

References

Business Case for Energy Efficiency

Pathways to a low carbon economy

 

 

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