CO2 abatement costs and economic irrationality
I have previously stressed my view that improving energy efficiency should be the first step in addressing carbon emissions. An article from the Economist provides some interesting measures of the costs from different strategies to abate CO2. The article refers to a study conducted by the Swedish power utility Vattenfall.
Some excerpts:
“The result [of the study] is a testament to economic irrationality”
And
“Compared with pursuing greater energy efficiency, the abatement measures into which so much money is now being poured look rather expensive. Carbon capture and storage and wind and solar power, for instance, all have positive, and relatively high, abatement costs.”
And here’s a very interesting comparison of the CO2 abatament costs of each technology:
I haven’t found the original Vattenfall study. So no details are available on how the cost are computed. But their website is quite interesting. Vattenfall has a very diversified energy production mix with nuclear (40%), hydro (20%), coal (40%), gas (2%), biofuel (<1%) and wind (<1%) sources. More interesting is probably the fact that, even if wind, biofuels and CO2-free coal power plants are more expensive solutions to CO2 abatement, the company is heavily investing in these technologies, other than nuclear. Is this another example of economic irrationality?
Thursday 14 Jun 2007 | Nanni | Climate change
I, for one, am not going to reduce my consumption of electricity (with the exception of fitting a solar water heater with heat pump backup) unless I see a very significant move by government towards a substantial solution to the CO2 problem. I do not consider Nuclear or Carbon Sequestration as solutions. On the motive energy front, however, I purchased a motor scooter for much of my personal travel (parked in the garage at the moment because of the rain). This halved my daily fuel consumption. I am keen to obtain an electric car of this type http://www.zapworld.com/ZAPWorld.aspx?id=4560 as the family car should it become available. But that won’t do anything for CO2 emissions unless the electricity is produced in a CO2 free way.
Further on the motive energy front, I am, along with some of my colleagues examining algal oil as a solution in a variety of ways. My personal challenge is to create an energy fence. On the surface of it a vertical panel 2.5 metres by 40 metres should produce between 1000 and 2000 litres of bio diesel per annum. The process of extracting the oil appears to be reasonably straight forward and can be handled in a variety of ways. The real challenge is in the needs of the algae. Sunlight is the easy bit. Getting CO2 into the growth “soup” is the major hurdle. The minor problem is the management of the nutrients.
Anything other than a core approach to CO2 emissions is just fiddling around the edges. Unless the government is prepared to manage into place at least 30 gigawatts of base load solar energy capacity then they do not appreciate the problem and we need to get another governemnt that will. Once that commitment is in place then the public can be expected to commit to a programme of personal property improvements with energy saving objectives.
Interestingly - that chart seems to have lost a few pieces of information from the version that has been floating around for the past 5 months. McKinsey did a version (based on the vattenfall work) which you can find at
It provides a little more info showing the relevant place you may need to be on the curve to stabilise at 550, 450 and 400ppm CO2 (and the associated MC).
And yes - let’s address energy efficiency - some command policy measures addressing the known market failures will make some improvements, but most of the empirical work looking at this still favours prices to drive the adoption (and development).
And neither the Vattenfall study or the McKinsey piece give you sufficient info to understand where they get their numbers from.
Fantastic graph. This is perfect ammunition to fire at the Beattie government’s approach which relies nearly entirely on CCS and a switch from coal to gas… the two most economically inefficient ways to achieve reductions. So much for the ‘Smart State’. It was frustrating to see him speak at a sustainable industries dinner a few weeks ago and not even hear him mention the words ‘wind’ or ’solar’ in his plans for Queensland’s energy future.
Like Bill above, I do not see nuclear or CCS as options either. Nuclear power is a cane toad - solving one problem with a worse option - and CCS is best summarised in the following analogy… “Everyone knows that if you fart under a doona, it’s going to get out eventually,” not to mention the potential it has to cause geological instability and groundwater acidification.
And I suppose those preferences represent the demand side… I’d be extremely happy to pay for insulation, fuel-efficient vehicles, wind, and solar, but my willingness-to-pay for nuclear power or CCS is absolute zero.
[...] I have wondered previously, in the context of global warming, about how energy efficiency and carbon cutting measures might be of economic benefit. This Economist article talks about an interesting study undertaken by Vattenfall, a Swedish power utility, to quantify the economic costs of various emission control measures. (via) [...]
Hey Bill, the car looks pretty cool… that said I’m confused why you rule out nuclear power and geo-sequestration?
I’m all for 30 gigawatts of solar energy, but my back of the envelope calculations is that assuming $2000 a kilowatt of capacity solar thermal that would cost us $60 billion dollars. Though I believe the electricity cost is a cheap 8 cents a kwh. Though if anyone knows any different figures let me know.
If geo-sequestration works then why not use it? Fossil fuels are cheap and easy to access, what’s wrong with using them and putting the CO2 back in the ground?
As far as the ZAP-X goes it looks good and has an appealing distance per recharge of 560km but I’m skeptical about the 9000 ‘life cycles’. 9,000 x 560km = 5,050,000km. My car is ten years old and has travelled nearly 300,000km. I’m guessing the battery becomes less efficient with every recharge.
The additional information in the McKinsey graph was very interesting. Wind and solar are indeed much more expensive than insulation, but they’re still ‘necessary’ to keep atmospheric concentrations to 450ppm.
Housing standards should be improved to encourage more insulation, and this would pay for itself, so who would argue? It would make a greater positive difference to carbon emissions than compact fluro lightbulbs, and people would be more comfortable in their homes. But we still need more solutions.
On cars:
These people offer a cheap local(Melbourne) solution to car-fuel http://vegiecars.com.au/
Hi Guys,
You stated in the post that you couldn’t find the report from which the Economist drew their data. The following link might help http://www.vattenfall.com/www/ccc/ccc/577730downl/index.jsp The bottom section refers to the Economist article and the Global Mapping pdf has the same curve as has been reproduced in the article.
Regards,
BmwMTRHKuhSz4
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*Is this another example of economic irrationality?*
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