How much should we spend to reduce greenhouse gas emissions? McKinsey & Company says the United States can reduce its emissions to well below recent levels by 2030 if it invests in programs and technologies that cost no more than $50 per metric ton of abated carbon dioxide equivalent emissions. But some might argue that won’t be enough; others may say it is too much.
To provide another answer, the Obama administration has estimated the social cost of carbon. As shown in the above chart, the cost depends on the year the gases are emitted; the discount rate; and whether you believe the average cost estimate or an estimate at the 95th percentile of the high end of costs. Costs rise for gasses emitted in the future because they are supposed to have more serious and irreversible consequences.
As the chart shows, if you believe the average of cost estimates, McKinsey’s $50 is about right for gases emitted in 2010 no matter what the discount rate. Even though interest rates are low today, most people would argue that the long-term discount rate is closer to 4 percent than 2.5 percent, so $50 would be about right even as far into the future as 2050.
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While $200 is four times McKinsey’s marginal cost, even the highest numbers on the chart above are well below the cost of reducing emissions using urban planners’ preferred techniques of investing in transit and increasing urban densities. If they reduce emissions at all, these policies will cost thousands of dollars per ton of abated emissions.
In the course of preparing my Cato paper on compact cities, I used Moving Cooler, a document prepared by Cambridge Systematics, to estimate the cost per ton of various policies. Most transit improvements cost well over $1,000 per ton. Densification, transit-oriented development, and similar land-use policies cost more than $10,000 per ton. These estimates use Moving Cooler‘s optimistic assumptions about the effectiveness of these policies.
On the other hand, there are some things that can be done to reduce emissions at a very low cost. One is traffic signal coordination, which has a negative social cost as it will pay for itself in the savings to motorists. Other things that actually reduce traffic congestion, especially the use of congestion pricing of roads, also have a very low social cost.
Many people are still skeptical of climate change. But those who truly worry about climate change should want to reduce greenhouse gas emissions at the lowest possible price. Those who promote transit and density as solutions are not truly interested in the climate except as a political tool to impose taxes and regulations on people for some other reason.
On the other hand, there are some things that can be done to reduce emissions at a very low cost. One is traffic signal coordination, which has a negative social cost as it will pay for itself in the savings to motorists.
Of course, planners speak out of both sides of their mouths. They talk about lowering carbon “emissions”, while at the same time they time traffic lights to produce as many stop & go movements as possible, and gloat when freeways jam up from lack of capacity. Obviously, this significantly increases carbon “emissions”, as well as legitimately harmful emission products. So we find that planners really aren’t worried about carbon; they just want to use it as an excuse to impose taxes and regulations upon the naive & foolish, and produce their own version of utoptia that also, oddly enough, happens to enrich planners’ & politicians’ connected friends & colleagues in the construction & development sector.
Sir,
You have perfectly described the developer scam that is Portland.
Here in TX a small town outside of Austin instituted the “traffic light light stop as economic development” policy, which was fought tooth and nail by professional planners in the area. How is it that State DOT’s have hoards of traffic planners and engineers who’s sole job is to try and reduce congestion, yet these are the same people that “gloat when freeways jam up”?
Some planners have offered densification and transit as carbon reduction strategies, but most are smarter than that. The planners that I came up with want to fight carbon emissions with technological determinism (scrubbers on coal stacks, electric cars, alternative energy, etc).
I’m all for signal coordination (less convinced about congestion pricing), but I see using fossil fuels more efficiently and using alternative sources of energy as the most effective way to reduce carbon emissions.
Mr. O’Toole, I’m surprised there is no mention of driverless cars in the post.
The nice people in West Virginia and Wyoming won’t like this idea, but I offer it anyway.
A great way to reduce carbon emissions is to displace coal-fired electric generation with nuclear generating stations.
Because there is so much transmission infrastructure connecting existing coal-fired generating stations, it makes sense to me to locate new nuclear generation in the same places.
The Antiplanner wrote:
On the other hand, there are some things that can be done to reduce emissions at a very low cost. One is traffic signal coordination, which has a negative social cost as it will pay for itself in the savings to motorists. Other things that actually reduce traffic congestion, especially the use of congestion pricing of roads, also have a very low social cost.
Re-timing traffic signals is the ultimate win-win for everyone. Better traffic flow, lowered emissions, and improved conditions for pedestrians and bicyclists (especially where they have their own signal heads and sometimes signal phases).
Those of us north of the 49th want some of that global warming.
What is the social cost of methane?
BTW, Xcel (not a typo) here in Colo announced last week that they are looking for 400 MW of additional peak generation. They are asking for solar rather than NG, as solar will be cheaper for them.
As to the SCC and which discount rate is correct, whatever the mix of mitigation and adaptation is chosen, we have to remember that everything we’ve done to this point is locked in the system. So the reduction in economy from BAU must be added to any cost of mitigation – that’s lost activity that someone has to bear. Birth rates are going to fall one way or another, which means our way of doing retirement has to change as well.
Lots to do in a very, very short time, and the clown show in DC indicates we are very, very far away from being sane enough to even talk about what to do.
DS
“BTW, Xcel (not a typo) here in Colo announced last week that they are looking for 400 MW of additional peak generation. They are asking for solar rather than NG, as solar will be cheaper for them.”
Source? The one or two scant news articles on the subject reference using “low-cost” natural gas power when when the wind ain’t blowing or the sun ain’t shining. Low-cost begs the question, lower cost than what? What is the anticipated cost per megawatt of solar vs natural gas? Guess it’s a secret: “Details of the proposals Xcel has chosen weren’t available. Eves declined to provide them, saying that disclosing the locations and prices of the proposals would indicate which developers were the winning bidders.” Right. Excuse me for being skeptical of unsupported claims made by the CEO of a government-granted monopoly. Also the proposal is for only 170 megawatts from large-scale solar; 450 megawatts will come from bald eagle chopping turbines.
Frank, by the end of the decade solar will be ~ grid parity in the US. There are places in EU where it is now. With depreciation and maintenance the LCA works out.
HTH.
DS
Thanks for the reply. I saw that piece and the press release. It seems that building new plants are “cost competitive”; what does that really mean? That building a natural-gas fired plant costs close to the same as a solar plant? I’d like more specifics on cost, but those aren’t forthcoming. Also, is the energy generated cost competitive? Will a kWh from solar cost the same to produce as a kWh from gas? Will consumer costs be the same for these two energy types? While no renewable energy source is without negative externalities, solar makes environmental sense. I just don’t know if it yet meets cost/benefit analysis and economic sense.
CO2 is a prerequisite for all plant life and therefore all animal life as well. Rising CO2 levels are a benefit to plant life and the planet. So the relevant question is, does CO2 produce negative externalities for human society. CO2 emissions do not produce negative externalities in the way that ground level ozone, lead, mercury, dioxin, fecal coli-form bacteria, particulate matter and fertilizer runoff produce negative externalities. Rising CO2 levels could be a feature or a bug depending on other factors which effect climate and depending on how man chooses to adapt.
The historical record is on the side of CO2 being a net positive. In last 100 million years, CO2 levels were once higher than 2000 ppm. In earlier periods, with much higher CO2, the earth was warmer,wetter, ecologically more diverse, less desertified and had much less ice. Declining CO2, over the last 100 million years, corresponds closely with a colder, drier, desertifying and frozen planet. Given a choice between the former climate and the latter, I choose the former.
So barring any conclusive proof, that humans will be harmed in either the near term
or long term by CO2, I would submit a social cost of CO2 of zero dollars per ton. In fact, I would impute a negative cost to CO2 emissions because fossils fuels which create the emissions make live longer and better throughout the world.
The IPCC has proudly declared that their climate models predictions have been wrong for 15 years, but that doesn’t matter. The facts are wrong, not the computer models.
Even scientists go through the five stages of grief. Denial is stage 1. Anger is stage 2, and we are seeing lots of that. Stage 3 is bargaining, and how much you wanna bet we see a lot of that….
I just don’t know if it yet meets cost/benefit analysis and economic sense.
In their LCA, they determined that at some time in the near future when depreciation hasn’t made the facility replaceable yet, solar power will be cheaper than NG. Not today, but soon. Most forecasts I see say by 2020 or thereabouts.
There is an analog to Moore’s Law with solar technology. I suspect within a decade carbon will replace Si and that will end most of the negative externalities with materials.
DS
Dan, don’t you think that PV generation is finite and produces negative externalities? It requires resources mined from the earth and an energy intensive manufacturing process. There are a finite number of places where solar is cost effective or even practically effective, regardless of cost. Environmentally, PV changes the albedo of the planet. Where ever solar is installed, nothing grows underneath and energy storage is still a major issue. I am not picking a fight. I merely wonder what you think about the aforementioned?
Jardinero:
1. PV is used on green roofs just fine. PSU has done some good work identifying a good species mix that works. Bringing more grasses into the mix with some panel separation is key.
2. PV-albedo is minimal.
3. There are plenty of places where PV is effective. Some more effective than others, sure.
4. I agree mining for polysilicon and REMs is harmful, which is why I brought up carbon. Much less harmful than tar sands and deepwater drilling, tho, and fugitive emissions from fracking maybe.
5. I agree storage is an issue. However when energy starts flowing from other sources into the grid, we don’t complain that there is no storage on the grid.
DS