by Roger Pielke, Jr.
This post was originally published at Prometheus
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Last week I mentioned the conclusions of the IEA Energy Technologies Perspectives report. I have had a chance to look at the full report in some depth, with an eye to the assumptions in the report for the spontaneous decarbonization of the global economy.

All assessments of the costs of stabilizing concentrations of carbon dioxide start with a baseline trajectory of future emissions. The costs of mitigation are calculated with respect to reductions from this baseline. In the Pielke, Wigley, and Green commentary in Nature (PDF) we argued that such baselines typically assume very large, spontaneous decreases in energy intensity (energy per unit GDP). The effect of these assumptions is to decrease the trajectory of the baseline, making the challenge of mitigation much smaller than it would be with assumptions of smaller decreases in energy intensity (and a higher baseline trajectory). Obviously, the smaller the gap between the baseline scenario and the mitigation scenario, the smaller the projected costs of mitigation.

The annotated figure below is from the IEA ETP report (Figure 2.8, p. 74), and shows the assumptions of decreasing energy intensity in the baseline scenario (BASELINE), as well as the two mitigation scenarios (ACT [emissions stabilized at current values] and BLUE [emissions half current values]).

click for full-size image

In the annotation I show with the red call out the difference between the BASELINE and BLUE scenarios, which the report identifies with a cost of $45 trillion. The magnitude of this difference is about 0.8% per year. However, the report assumes that about twice this rate of decarbonization of the global economy will happen spontaneously (i.e., the magnitude of the BASELINE reductions in energy intensity). With the green call out I ask how the baseline is actually to be achieved.

In numbers, the BLUE scenario assumes that by 2050 a trajectory consistent with stabilization at 450 ppm carbon dioxide will require reductions in emissions from 62 Gt carbon dioxide to 14 Gt. But what if we use a "frozen technology" baseline as recommended in PWG?

Using the assumptions from Annex B of the report for global economic growth (4.2% to 2015, 3.3% 2015-2030, and 2.6% 2030 to 2050 -- we could play with these assumptions as well) results in a frozen technology baseline of 115 Gt carbon dioxide. Thus, 53Gt of carbon dioxide are assumed in the BASELINE to be reduced by the automatic decarbonization of the global economy. This spontaneous decarbonization will occur without any of the technologies proposed in the report to get from the baseline to the mitigation level (otherwise the report would be double-counting the effects of these technologies). What these technologies are is anyone's guess, as the report does not describe them.

If the world does not automatically decarbonize as projected in the IEA baseline, then the costs of mitigation will be considerably higher. By how much?

If we take the report's marginal cost estimate of $200 to $500 per ton for mitigating carbon dioxide, then a simple estimate of the full costs from a frozen technology baseline would be an additional $210 to $530 trillion above the $45 trillion cited in the report. Yes, you read that right.

What if the assumption of automatic decarbonization was off by only 10%? Then the additional cost would be an additional $21 to $53 billion, or about the same magnitude of the IEA's total cost estimate of mitigation (i.e., of moving from the BASELINE to the BLUE trajectory) .

What does this exercise tell us about cost estimates of mitigation?

1. They are highly sensitive to assumptions.

2. Depending on assumptions, cost estimates could vary by more than an order of magnitude.

3. We won't know the actual costs of mitigation until action is taken and costs are observed. Arguments about assumptions are unresolvable.

Meantime, it will be easy to cherrypick a cost for mitigation -- low or high -- that suits the argument that you'd like to make.

Anyone telling you that they have certainty about the future costs of mitigation -- whether that certainty is about high costs or low costs -- is not reflecting the actual uncertainty. Action on mitigation will have to take place before such certainty is achieved, and modified based on what we learn.