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Reducing CO2 emissions less costly than expected

Within the energy sector, co2 discharges can be cut by using wind power, straw and wood chips instead of coal and oil as fuels.

A report that COWI has drawn up for the Nordic Council of Ministers shows that a 60-80 per cent reduction in greenhouse gas discharges in the Nordic region will cost no more than one per cent of GDP.

For DKK 130bn and with the technologies known to us today, discharges of greenhouse gases like co2 and methane can be cut by up to 80 per cent by 2050 throughout the Nordic region.

This is the chief conclusion of the report Climate 2050, which COWI has prepared for the Nordic Council of Ministers. Among other things, the report will form part of the decision-making basis for the negotiations being conducted internationally by both Denmark and the Nordic countries as a whole on reducing co2.

Surprised at low cost

COWI project manager and economist Asger Garnak says of the calculations: "We were surprised to learn that it doesn't actually cost more than one per cent of the Nordic countries' GDP to reduce greenhouse gases by such a large proportion. Energy is the sector where there are primarily gains to be had, as wind power, straw and wood chippings will gradually replace coal and oil as fuels."

The report's co-author, COWI economist Mikkel T. Kromann, adds:

"The price of cutting greenhouse gases by 60-80 per cent in 2050 will be equivalent to everyone paying one krone out of every 100 from their pay for that particular year. But you need to realise that our time-frame is 43 years. If those reductions were to take place over a shorter period, it would make it a lot more expensive."

Apart from the energy sector, which the two economists have calculated as accounting for 50-70 per cent of the overall reduction, the transport sector and the agricultural sector will each be able to contribute 5-7 per cent.

Conservative estimate

Both emphasise that no allowance has been made for unexpected new technologies in the report, which is therefore marred by great uncertainty - in a positive sense.

"Our estimate has actually been made on a conservative basis, which means that if new technologies do emerge, e.g. in the form of electric cars, reducing greenhouse gases will be even cheaper," says Garnak.

Smaller reductions

The two economists have also calculated what a smaller reduction in greenhouse gases in the Nordic region will cost in 2020.

The cost of reducing discharges by 30 per cent in 2020 is DKK 20bn, and DKK 4bn for a cut of only 15 per cent, i.e. 0.26 and 0.05 per cent of GDP, respectively (at 2007 prices).

The conclusions in the report for the Nordic Council of Ministers match the conclusions in the report Climate Change 2007 from the UN's climate panel, IPCC, which has performed similar calculations for co2 reductions globally.

By Kathrine Schmeichel
Published: 05.07.2007