59-05-032 Proceeding

31 Proceedings of the Princess Maha Chakri Sirindhorn Congress McKinsey & Company report on Pathways to a Low-Carbon Economy of 2009 provided sectoral and regional insights on identifying emission reduction opportunities based on cost and reduction potential across sectors and countries assuming global carbon emission peaks at 2010, which is still relevant in today’s context. Figure 2 compares the capital intensity 3 and abatement cost 4 of sectors including power, forestry, agriculture, transport, buildings, etc. For example, transport and building sectors will have a net negative abatement cost, meaning investment will be recovered through energy saving in the long run, but the upfront investment required is almost 10 times higher than in power or the petroleum and gas sectors. Electricity generation, as in power sector, stands out as the sector with the highest reduction potential and relatively low capital intensity, but will result in net positive abatement cost. The McKinsey Abatement Cost Curve (MACC) presents an estimate of the maximum potential of all technical greenhouse gas (GHG) abatement measures below €60 per tCO 2 e (in 2005 real Euros) if each lever is pursued aggressively. In Figure 3, the width of each bar represents the abatement potential of that measure at a specific year, and the height represents the cost of mitigating 1 tCO 2 e by 2030 averaged across sub-opportunities, regions and years. 3 Defined as the additional upfront investment relative to the BAU technology divided by the total amount of avoided emissions over the lifetime of the asset 4 Defined as average cost of avoiding 1 ton of CO 2 e by 2030 through that opportunity Figure 2 McKinsey Abatement Cost Curve