How much does it cost to reduce carbon emissions? A primer on electricity infrastructure planning in the Age of Climate Change

If you are a sentient and literate human being, there is no way you have been unaffected by the news about climate change. Some people might disbelieve the claim that there is a link between emissions of carbon dioxide (CO2) and climate change. But most believe it. They therefore agree that we should do everything we can to reduce man-made CO2 emissions. As long as it does not cost too much.

Most people however are not aware that there are real world examples of exactly how to reduce CO2 without major expense. Some countries and jurisdictions pursue very effective CO2-mitigation strategies, without penalizing themselves economically. Others appear to believe that penalizing themselves, via high electricity prices, is the way to reduce CO2. Unfortunately for the latter, they are failing miserably.

And some countries that are paying through the nose to reduce CO2 have actually achieved the opposite of what they intended: in their case, the effect has been to increase CO2 emissions.

What to do? Well, here is a presentation I gave recently, which lays out the criteria for building a low-carbon electricity system without going broke. It shows who has done it right, and who has done it wrong. Have a look: you may be surprised who I am talking about.

10 comments for “How much does it cost to reduce carbon emissions? A primer on electricity infrastructure planning in the Age of Climate Change

  1. January 29, 2014 at 22:36

    Sadly, the people who most need to internalize this lesson are the ones most likely to ignore it out of hand.

  2. December 28, 2014 at 20:09

    What is the cost for not reducing carbon emissions?

  3. Peter Lang
    January 4, 2015 at 18:36

    Very interesting post and presentation. Thank you. I’ll reference this frequently.

    What are the costs on the x axis on Slide 9? They seem too high to be LCOE or LRMC in $/MWh. Are they an LCOE for the system including transmission and grid management costs? Or are they an average cost to consumers in $/MWh?

    It would also be an improvement to have the units on Emissions intensity figures on the Y axis.

    Also, minor point: The quadrants on Slide 4 are numbered differently to the remainder of the slides and text. Itwas a bit confusing until I realised.

    • January 5, 2015 at 10:33

      Peter, thanks — glad you like the presentation. The prices are from the OECD’s publication Electricity Information 2014. Here is the OECD’s explanation of price data in that publication:

      Real price indices are the current price indices divided by the country specific producer price index for industrial prices and by the consumer price index for the household sector. See Principles and Definitions at the beginning of Part II for further details on methods used Specific producer and onsumer price indices are based on year 2010=100.

      • Peter Lang
        January 5, 2015 at 20:43

        Thank you. Now I understand.

        Some others are taking interest in this post, e.g. DeWitt Payne says:

        “My fundamental principle of human events is that irony always increases. Slide #13 in your linked article is yet more proof that this is true.”

        And the Editor of Science of Doom replied he liked it too.

        • January 7, 2015 at 12:26

          presentation edited, to fix the quadrant numbers as well as to rename CP-Matrix to Electricity Carbon-Emission and Retail Price (ECERP) Matrix. The former title gave the impression to some that I was talking about a price on carbon, when in fact the price was the price consumers pay for electricity. The issue of putting a price on carbon was taken up in a later article.

          • Peter Lang
            January 7, 2015 at 22:01

            Excellent improvements.

            However, I suggest ALCARA should not be advocated for the same reasons ALARA (as low as reasonably achievable) should not be advocated for allowable radiation limits. Allowable radiation limits should be raised (progressively, over time) to AHARS (as high as relatively safe). For similar reasons, policies for reducing carbon intensity should aim for ‘as low as economically justifiable’. We should not advocate to damage economies because doing so damages human well-being. We can reduce global GHG emissions economically rationally, but not by policies such as carbon pricing or mandating and subsidising renewable energy. Instead, we need to remove the impediments imposed over the past 50 years that have distorted energy markets – especially nuclear energy.

            Here’s my explanation of why carbon pricing and any policies that aim to increase energy costs will not succeed:
            Part I: “Why carbon pricing will not succeed”

            Part II: “Why The World Will Not Agree to Pricing Carbon”

            The main chart:

      • Peter Lang
        August 19, 2015 at 01:46


        Could you please provide as link to the CO2 emissions intensities per country you used for Slide 10?

        • August 19, 2015 at 07:35

          Peter — you can find this info in:

          OECD, Electricity Information 2013, p. III.58;
          EIA, CO2 emissions from fuel combustion, p. 111;
          Ontario estimate from IESO and EmissionTrakā„¢

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