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November 19, 2009
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presentation; it is not a complete record of the discussion.
MacroeconomicMacroeconomicConsequences ofConsequences of
Climate ChangeClimate ChangeDiscussion Forum: Germany and Poland in Europe
7/26/2019 Greven McKinsey 201109
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1
The science suggests we need to "decarbonise" our
economy by around 90% long term to stabilize the climate
Requires a
radical changetowardsa low carboneconomy!
"Business as usual" GHG emissions
Global emissions
GtCO2e
Natural GHGabsorption rate
85
70
40-90%
205020302002
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2
35 Gt of reductions below “Business as Usual” in 2030 arerequired for a 450 ppm, 2°C pathway
Referencepathway"Business asUsual"
450 ppm pathway(with overshoot)
Change relative to 1990Percent
+17% -7%
Current proposals1
8–11 Gt abate-ment in 2020
50
55
60
65
70
75
1990 2000 2010 2020 2030
0
40
45
52
61
70
50
55
60
65
70
75
1990 2000 2010 2020 2030
0
40
45
4435
-17
Global GHG emissions, Gt CO2e per year
1 US: 17–28% below 2005 level by 2020; EU: 20–30% from 1990 level by 2020; China: Reduce energy consumption per national income by 20%between 2005–10; Russia: stabilise emissions at ~30% below 1990; Brazil: Reduce deforestation rates by 70% by 2017, equivalent to 4.8b tons lessCO2 emitted cumulatively; Japan: Reduce 80% by 2050 from current levels; Canada: 20% reduction from 2006 level by 2020; Mexico: Reduceemissions from 2002 levels by 50% by 2050, plus proposals from 12 smaller Annex 1 countries. Assumptions have been made on timeline and
pathway to calculate abatement in 2020
SOURCE: McKinsey Global GHG Abatement Cost Curve v2.0; Houghton; IEA; US EPA; den Elzen, van Vuuren;Project Catalyst analysis
-35
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3
What could we could “afford” if we had to live on 6 kilos of
co2e a day?
* Based on 20 Gt/year sustainable emissions and future population of 9 billion people.
Source: McKinsey analysis
Per-capita annual emissions, 2005
TCO2e
21.5United States
15.9Russia
9.6EU-27
5.7China
1.7India
2.2World sustainableaverage*
Correspondingto 6 kg of CO2eper day
“Emission budget” for a day (alternatives)
Travel 20–40 km car ride
Stay home 10–20 hours air conditioning
Shop 2 new T-shirts
Eat 2 meals a day of 300 gmeat, 200 g fries, tap
water
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4
McKinsey has quantified global greenhouse gas
abatement opportunities
Source: McKinsey
• Scope: 6 sectors, 6regions, 3 time-
frames ('10, '20, '30)
• Involvement: Morethan 300 clients,industry experts and
more than 10,000customers
• Academic review:More than 50 leading
academics
AbatementGt CO2e/year
Cost of abatement
EUR/tCO2e
• Each bar is one measure, or group ofmeasures (e.g., "solar")
• Width: Amount of CO2 equivalents that canbe reduced by implementing the measure
(reasonably aggressive potential)• Height: Cost to avoid a ton of CO2
equivalent by the measure (as comparedto business as usual)
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5
30 35 38
40
-100
10
10
30
25
-50
20
60
-20
-10
Solar PVOn-shore wind
15
Solar conc.Degraded forest reforestation
Co-generation - New build
Nuclear
Retrofit building envelope, residential
20
Recycling new waste
Consumer electronics, residential-86.35
Coal CCS new built
-60
0
-70
-30
-40
Grassland management
Reduced deforestation fromslash & burn agriculture
Coal CCS retrofit
Reduced deforestation frompastureland conversion
Off-shore wind
-80
-90
50
5
Energy efficiency other Industry
Abatement cost1
€ per tCO2e, 2030
Abatement potentialGtCO2e per year
SOURCE: McKinsey Global GHG Abatement Cost Curve v2.0
Achieving 35 Gt in reductions will require capturing more than 90percent of the world’s economic reduction opportunities
1 Up to costs of €60/t, excluding transaction costs, 4% discount rate
Breakdown by geographiclocation
• 12 Gt in developed countrygeographies
• 26 Gt in developing countrygeographies
Breakdown by abatementtype:• 8 Gt for forestry• 14 Gt for energy efficiency• 12 Gt for low carbon energy
supply• 4 Gt for agriculture
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The cost curve can be broken down into three main
abatement categories Average costEUR / t
Abatement potentialin 2030Gt CO2e
Low carbonenergy
supply
Land use
Energyefficiency
SOURCE: McKinsey Global GHG Cost Curve V2.0
-32
-9
-7
1
8
11
14
45
Industrial and waste 6.6
Transport 3.2
Agriculture 4.6
Reducing Emissions fromDeforestation/ Forest Degradation
5.1
Afforestation/Reforestation 2.7
Renewables, nuclearand other clean energy
9.9
CCS 2.2
Buildings 3.5
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7SOURCE: Global Insight; World Industry Monitor, February 2009; McKinsey
100% =
Energy industry
IT and IT services
Mechanical and plant engineering
Energy-intensive industries
Building technologies andconstruction industry
Transportation and logistics
36,500
8,760
1,1101,710
9,830
7,440
7,650
Energy is a critical strategic factor for 40 percent of theglobal economyGlobal revenues 2008, EUR billions
60% 40%
100% = 90,750
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In Germany, the share of industries where energy is of strategicimportance is higher than in most industrialized nations
SOURCE: Global Insight; World Industry Monitor, February 2009
2008, percent
5,380 7,460 3,640 4,170 4,370 21,070Total marketEUR billions p.a.
Revenues ofrelevant sectorsEUR billions p.a. 2,380 3,210 1,420 1,460 1,360 6,320
UK
31
France
35
Italy
39
Japan
30
Germany
Transportation andlogistics
44
Building technologiesand constructionindustry
Energy-intensiveindustries
43
Mechanical andplant engineering
IT and IT services
Energy industry
World:Ø 40%
USA
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Growth centers offer business opportunities of more thanEUR 2 trillion
SOURCE: McKinsey
29%
8%
16%
13%
6%
Total, selected andother growth centers Development of selected growth centers within the relevant sectors
EUR billions p.a.
13% p.a.
2020
500
2008
2,140
Annual
growth rate
79
5
49
87
15
345
30
120
180
325
Energy industry
IT and IT services
Mechanical andplant engineering
Building technologies
Transportation andlogistics: passenger cars
2008
2020
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10
2
13
20
35
270
110
30
360
Plug-in hybrid2 and
electric vehicles
< 1
Components of optimizedcombustion engines
Hybrid vehicles1
Energy-efficient cars – global market potential in growthcenters
SOURCE: McKinsey
29%
– 3
27%
Development in growth centers
EUR billions p.a.
2008
2020, scenario: USD 60/barrel2020, scenario: USD 110/barrel
31%
25%
– 3
Energy-efficient cars:total, growth centers
29% p.a.
1 Largely "mild hybrids" in which the electric motor simply supports the combustion engine2 Full hybrids that can be operated purely on electricity3 Market currently too small to calculate the growth rate
Annual growth
rate
15
2008 2020
325
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11
7
16
23
40
10
20
35
40
75
Smart homesolutions < 5
< 1
Decentral CHP< 1
Heating technology
Lighting
Building insulation
White goods
Efficient building technologies – global market potential ingrowth centers
SOURCE: McKinsey
Development in growth centers
2008
2020
5%
5%
7%
9%
– 1
– 1
6% p.a.
1 Market currently too small to calculate the growth rate
Efficient buildingtechnologies: total,growth centers
Annual growth
rate
87
2008 2020
180
EUR billions p.a.
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12
5
1
16
17
10
10
15
25
30
40
Efficient motorsystems
Efficient IT
Heat recovery
Automation andcontrol
Industry-specificsolutions
Efficient technologies in mechanical and plant engineering – global market potential in growth centers
SOURCE: McKinsey
12%
5%
4%
25%
6%
EUR billions p.a.
8% p.a.
49
2008 2020
120
Mechanical and plantengineering: total,growth centers
Annual growth
rate
Development in growth centers
2008
2020
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1
1
3
5
10
15
Traffic management
systems
Smart gridsolutions
IT in energymanagement
Innovative IT systems in energy management – globalmarket potential in growth centers
SOURCE: McKinsey
Development in growth centers
20082020
14%
14%
21%
16% p.a.
EUR billions p.a.
Innovative IT systemsin energy management:total, growth centers
Annual growthrate
30
5
2008 2020
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Low-emission technologies in the energy industry – globalmarket potential in growth centers
SOURCE: McKinsey
15%
10%
14%
10%
– 1
13% p.a.
EUR billions p.a.
Development in growth centers
1 Market currently too small to calculate the growth rate
Annual growthrate
Low-emissiontechnologies in theenergy industry: total,growth centers
79
2008
345
2020
0
11
13
23
32
10
35
60
75
165
Carbon captureand storage
Biomass power
Nuclear power
Solar power
Wind power
2008
2020
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Energy efficiency measures to Germany would reduceenergy consumption by roughly 20 percent until 2020
SOURCE: McKinsey
Energy consumption in Germany, TWh p.a.
13
Energy cost savingsEUR billions p.a. 21 7 41
9
Additional savings ofGerman companies abroad 0 3 12
Total savingspotential in 2020:EUR 53 billion
1 The same usage patterns and economic performance as in 2007 were assumed to give a better illustration of the savings potential
250
680
1.000
720 1,900
520
750
20201Industrialproduction
630
Trans-portation
Industrialproduction
Buildings
2.40090
160
BuildingsTrans-portation
2007
-21%
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You can find studies and more aboutMcKinsey’s Climate Change SpecialInitiative here:
http://www.mckinsey.com/clientservice/ccsi