Anti-climactic on climate

By Jim Stergios
July 14th, 2008

I am writing this week from the Land of the Rising Sun, where it is so hot I cannot sleep. Fitting that this is the home of the great gargantuan unwieldy unworkable international treaty on climate that, surprise, no one is really implementing. OK. I know. I am in a sour mood. But it is really hot.

Tip of the hat to Bob Poole of the Reason Foundation. In his Surface Transportation Innovations newsletter (if you would like to begin receiving it or want to see it online, click here), there is reference to a must-read from McKinsey on how to reduce greenhouse gas (GHG) emissions in the transportation sector. Poole notes that the primary conclusion of Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? is that:

While U.S. GHG emissions are projected to increase from 7.2 gigatons of CO2 equivalent in 2005 to 9.7 gigatons by 2030, there is realistic potential to decrease the 2030 total by 3.0 to 4.5 gigatons using abatement options whose marginal cost is no more than $50/ton. And almost 40% of the total could be achieved at “negative” marginal cost—i.e., they would pay for themselves over their lifetimes. The five “clusters” where most of the reductions would come from are (in order) electric power, buildings and appliances, energy-intensive industry, carbon sinks, and transportation.

Although transportation is the smallest cluster (with reductions ranging from 0.3 to 0.7 gigatons/year by 2030, depending on which of three scenarios were implemented), it’s clearly an important element. The two key themes are increasing average vehicle fuel efficiency and reducing the carbon intensity of transportation fuels. The three largest contributors to transportation GHG reduction would be cellulosic biofuels, improved fuel economy for autos, and improved fuel economy for light trucks.

The study makes no assumptions about “lifestyle preferences” (such as thermostat settings, appliances, the size of vehicles, the size and location of homes, travel habits, etc.). Bob closes out his summary, noting that

These results are even more impressive when you finally get to page 45 and learn that throughout the study, the assumed long-term price of oil was only $59 per barrel. (Remember, most of this work was done during 2007, well before the recent escalation in oil prices.) As the report notes, “If the long-term price of oil were higher, these options would become even more attractive.” I’m hoping McKinsey will put out a second edition, re-doing the calculations with something like $120/barrel.

Prices will force changes in lifestyle as appropriate to individuals, making the impact even greater. But what will the environmentalists who love public floggings and self-flagellation do with such results?