The consulting company Ecofys has updated the 2000 flow chart from the World Resource Institute on the Greenhouse Gas emissions for the world and for 2010. You can obtain it here:

World GHG emissions flow chart

This gives rise to some thoughts:

1.It would have been interesting to know about the potential efficiency improvements in each sector. This gives an idea about the potential of technological progress to reduce emissions.Obviously, it would be nice to know something about the costs, too. For example, the McKinsey report on GHG abatement potential helps out here. Here is a graph from it:

McKinsey GHG Graph

Basically, negative (!) abatement costs are found in the building sector, mostly due to LED lighting, more efficient electrical appliances and insulation; followed by motor system efficiency. Together they accoun for roughly 30% of emissions. Thus, investing in these abatement measures will be a win-win situation for society: reductions in GHG emissions AND reductions in total costs. Why isn’t it done already? For example, if someone knows that he can save money from improving insulation in his house or buying more efficient appliances, then who does he/she not do so? a) up-front costs of retrofitting buildings with insulations or buying LEDs are high, while the benefits only come in the future. Since people discount they tend to go for the currently cheaper option; b) advertising may drive them to buy products that are less efficient. E.g. most advertisement is done for less fuel-efficient cars. And, face it – most 3 litre cars or hybrids are ugly compared to a Porsche… It is as if car manufacturers try to tell buyers: yes, we have fuel efficient cars, but the other ones are much nicer to own…
So unless producers can significantly reduce the prices of the more efficient products, consumers are unlikely to buy these. Here, governments can provide incentives. For example, the EU ban on conventional light bulbs in September 2012 is a step in that direction. In Luxembourg, the government subsidizes retrofitting of insulation in houses. Similar measures are undertaken in other EU countries.

In the other sectors, abatement costs are expected to be positive. Thus, without government intervention no serious efforts to reduce GHG emissions should be expected unless the price of emission permits increases substantially. I recently talked to an engineer of a large national energy company and he said that the company has no incentives to undertake any emission reductions at the current price of permits. He justified this by the fact that the “investors” want to see profits. Now, the main “investor” in that company is its government. Sounds like the sovereign crisis its taking its tolls even here…

2. Point-source carbon capture and storage is most likely only possible in the industry sector. However, this accounts for 29% of total emissions. Definitely not enough to halt the increase in atmospheric GHG.

3. One potential reduction in GHG emissions may come from Land Use Change, which makes 15% of world’s GHG emissions. Here deforestation and land use change make up 10%, the other 5% coming from agriculture. Thus, a halt on deforestation or an increased afforestation rate could help emission reductions.

4. Lifestock (e.g. cows) account for 5% of total GHG emissions. Though I also like to have a nice BBQ from time to time, reducing meat consumption is clearly one of the “easiest” ways to reduce emissions. So this is something where a change in consumer attitude is necessary. Unfortunately, in China the trend is going the other way – we see increases in meat consumption due to income growth.