If we believe McKinsey (and most of us usually do because of their excellent work) we can keep global warming below the magic 2oC level at relatively little cost. This is good news, but maybe it is too good to be true, at least for the building sector.
The consulting guru's latest report on the costs of cutting greenhouse gases (Pathways to a low-carbon economy – Version 2 of the global greenhouse gas abatement cost curve) presents an update of the McKinsey greenhouse gas abatement cost curve that has become quite famous. It shows the potential of reducing greenhouse gases across sectors and regions with a € 60 per tonne of CO2 equivalent (tCO2e) maximum abatement cost.
It is very convincing and carries a very strong message. The report repeatedly stresses the time factor - we cannot wait to act if we aim to stabilize global warming below 2oC. People can see the logic for acting as well as the relative cost of different actions. It shows the extremes, from switching light bulbs in the residential sector, to retrofitting a gas plant into a carbon capture and storage facility. The former produces savings of nearly € 100 per tCO2e and the latter just squeezes in under € 60 per tCO2e. The curve shows the many options between these extremes, allowing comparisons of abatement opportunities. The total annual cost would be between € 200-350 billion, corresponding to less that 1% of forecast global GDP, matching the estimates made in the earlier “Stern Review”.
McKinsey's message is very simple: start to act now, at least on measures that do not cost society anything and that could be implemented today. So far so good.
But I believe the report is overly optimistic about the potential to reduce GHG emissions by 2030. It uses an economic lens and disregards other considerations. The weak part is of course how to do it.