McKinsey: Global warming can be kept to 2 degreesC

Brussels  – The world could reduce emissions of greenhouse gases (GHG) by 70% in 2030 and keep global warming below 2ºC, but only with immediate global cross-sector action, accordin to A McKinsey & Co. report published today.  The report, “Pathways to a low-carbon economy”, analyses over more than 200 opportunities for reducing emissions of carbon dioxide and other GHG gases.

McKinsey identifies the potential to abate 47 gigatonnes (Gt) of CO2e in 2030, relative to expected global GHG emissions of 70 Gt CO2e. If all of this potential was captured the result would be that atmospheric GHG concentration levels would peak at 480 parts per million (ppm) and result in a likely increase of the global mean temperature of just below 2ºC.

The research also shows that capturing all of this potential will be a massive challenge, and require global action across all key sectors. Specifically, it would require aggressively pursuing three main types of low cost opportunities: in the first place energy efficiency representing around 40% of the global opportunity; second low-carbon energy supply - primarily wind, solar, biomass, hydro, geothermal, and carbon capture and storage; and third terrestrial carbon – reducing deforestation, increasing afforestation and improving agricultural techniques.

Costs and financing look manageable

The investment requirements to achieve the emission reductions have been estimated at Euro530 billion in 2020 and Euro810 billion in 2030. This represents 5-6% of the likely investments in fixed assets in each year. A large share of these investments can be regained through energy savings, and if the most cost effective emission reduction measures are being addressed, the net cost could end up below 1% of global GDP.

The timing of action to address climate change is critical, the report suggesting that a 10-year delay in global action to cut emissions would make even a target of 550 ppm difficult to achieve. Even with global action starting in 2010 it will be challenging to achieve sufficient emission reductions.

Every year of delay adds to the challenge, not only because emissions will continue to grow during that year, but also because it will lock the economy into high-carbon infrastructure, according to the study conclusions.

“Achieving the deep emissions cuts required to keep global warming below the 2ºC limit is possible but difficult. Without focused and coordinated action, it is unlikely that even the most economically beneficial options will reach their full potential” said Tomas Nauclér, a director at McKinsey and the leader of its Climate Change Special Initiative.

 “We hope that our work, through providing a comprehensive global mapping of the opportunities to reduce GHG emissions, will inform discussions among companies, policy makers and the public about how best to manage the transition to a low-carbon economy.”

The report builds on the original global GHG cost abatement curve developed by McKinsey and Vattenfall and incorporates insights gained from 10 national GHG abatement studies. It also draws on the expertise of our 10 partner and sponsor organizations: The Carbon Trust, ClimateWorks, Enel, Entergy, Holcim, Honeywell, Shell, Vattenfall, Volvo and the WWF – as well as the input of an academic review panel.