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Market News

 January 27, 2009
Pathways to a Low-Carbon Economy

 The potential exists to reduce greenhouse gases emissions by just enough to contain global warming below 2 degrees Celsius according to a new report issued by McKinsey & Company.

The report, which builds on the first global study published by McKinsey in January 2007, contains Version 2 of the global greenhouse gas abatement cost curve.  

It notes that while many nations are working in plans and strategies to reduce emissions of greenhouse gases (GHGs), an intense debate is underway on the technical and economic feasibility of achieving different target levels for emission reductions.  Opinions vary as to what reduction opportunities should be pursued, and what will be the true economic and social costs of different options for meeting these targets.

To provide a quantitative basis for such discussions, McKinsey & Company, supported by ten leading global companies and organizations - The Carbon Trust, ClimateWorks, Enel, Entergy, Holcim, Honeywell, Shell, Vattenfall, Volvo, WWF -  assessed more than 200 GHG abatement opportunities across 10 major sectors and 21 world regions between now and 2030. The results comprise an in-depth evaluation of the potential, costs and investment required for each of those measures.

The analysis concludes that:

  • Opportunities can be grouped into three categories of technical measures: energy efficiency, low-carbon energy supply, and terrestrial carbon.

  • 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.

  • Delays in action of even 10 years would mean missing the 2 degrees Celsius target.

 This report includes an updated assessment of the development of low-carbon technologies, of macro-economic trends and a more detailed understanding of abatement potential in different regions and industries. Furthermore it assesses investment and financing requirements and incorporates implementation scenarios for a more dynamic understanding of how abatement reductions could unfold.

To download the report appropriate forms are available on the McKinsey report’s Web site:

Download the executive summary
Download the full report

For More Information: McKinsey & Company