Geoscience Reference
In-Depth Information
ESTIMATING THE COSTS OF REDUCING CO
2
EMISSIONS
The cost of reducing CO
2
emissions is one of the most important
topics in climate-change economics. The basic idea is simple. You need
energy for services such as lighting, heating, or driving. You can get these
services in different ways. You can get your lighting with cheap, ineffi -
cient bulbs or expensive, effi cient ones. You can get your vehicle miles
with gas guzzlers or with hybrids.
If you use less energy, you will use less fuel and therefore emit less
CO
2
. However, in each case you will need to spend a little more up
front for the energy-effi cient equipment. The question is, when you
take everything into account, what is the net cost of reducing a given
amount of CO
2
?
Energy experts have made many studies of the costs of reducing CO
2
and other GHG emissions. Here are some of the important fi ndings.
• The economy contains many inexpensive opportunities. Some
may even have “negative costs” in the sense that the discounted
savings in energy costs more than offset the up-front investments.
• The costs begin to rise steeply as we restrict emissions ever more
tightly. Studies indicate that countries can achieve 10 or 20 percent
reductions with relatively modest and possibly even zero costs.
But reducing emissions by 80 or 90 percent in a few years would
be extremely expensive.
• There is today no “silver bullet” technology that will solve the cli-
mate problem in one shot. Rather, there are countless opportuni-
ties around the world, in virtually every sector of every country.
• Finally, even though we focus here on CO
2
from fossil fuels, a
complete portfolio of policies should not neglect sources outside
the burning of fossil fuels. There are many sources of GHGs that
can be reduced economically. For example, replacing the chloro-
fl uorocarbons that depleted the ozone layer led to reductions in
GHGs that would have had large warming effects. Similar steps
are available in other areas, some discussed in note 3, but I put
those aside to simplify this discussion.
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