Geoscience Reference
In-Depth Information
shows the percentage of CO
2
reduction for a given year, here 2025. Take,
for example, the cost estimates for a 30 percent reduction in CO
2
emis-
sions. The two methods are consistent in estimating that the average
cost of reductions at that level is a little more than 0.5 percent of na-
tional income. If we put this in terms of cost for the U.S. economy in
2012, it would average about $15 per ton of CO
2
reduced and an ag-
gregate cost around $100 billion per year. Aiming for sharper rates of
emissions reductions will raise the costs.
One interesting fi nding from the bottom-up studies is the claim that
there exist many negative-cost measures, that is, ones that save money.
They involve such things as using natural gas power plants and improv-
ing automotive fuel effi ciency. According to most bottom-up studies, we
can reduce emissions by around 15 percent and actually save money at
the same time. Another 15 percent or so of emissions reductions can be
achieved with relatively low cost, but it still adds up to $100 billion for
the United States.
The other curve shows the cost estimates from top-down or economic
models. These typically use statistical estimates that relate energy use and
emissions to prices and incomes. This approach is described as “top-down”
to refl ect the fact that it works with totals or aggregates rather than look-
ing at individual technologies. Economic models typically assume that
there are no negative-cost options. The economic approach assumes that
if there were negative-cost technologies, they would already have been
adopted and would not need climate-change policies to encourage them.
Note that the two curves have different slopes. The engineering or
bottom-up estimates start lower with negative costs but rise more rap-
idly than the economic or top-down approach. I explained the lower
starting point for the bottom-up approach as refl ecting the engineering
fi nding of negative-cost technologies. The higher slope results because
the bottom-up models typically analyze only a limited number of tech-
nologies. They are likely to overlook some emissions-reducing options
because they simply cannot include everything, whereas the economic
models in principle allow for all the possible approaches. Most bottom-up
estimates focus on a few dozen technologies in their calculations (auto-
mobiles, refrigerators, electricity generation, and so forth). But there are
