Investments and Mitigation Costs

Mitigation costs in the WEO-2009 450 Scenario

The 2009 edition of the World Energy Outlook includes an analysis of mitigation costs for the 450 Scenario measured against the Reference Scenario. WEO-2009 finds that using a bottom-up approach to estimate mitigation costs provides useful insights for comparing technologies and can help identify least-cost options for reducing CO2 emissions. However, these costs are very dependent on the underlying assumptions: the discount rate, fuel prices, the lifetime of the technology (technical or economic), the baseline technologies against which costs are measured and, in the case of road transport, the assumptions on mileage driven per car and per year.

Measuring costs in the power sector and, to some extent, in industry is relatively straightforward. On the other hand, there are substantial difficulties about estimating the cost per unit of CO2 saved in transport and households, where the costs are highly sensitive to the extent to which an appliance is used over its lifetime and to discount rates, which tend to vary considerably. Moreover, decisions made by individuals encompass a number of criteria that go beyond the cost of the car or the appliance and are very difficult to quantify, raising doubts over the value of some mitigation cost estimates. While, overall, unit mitigation costs can be a very useful tool to identify least-cost options for reducing CO2 emissions, estimates for the unit costs of mitigation measures for private transport and households should be handled with care.

You can find here additional information on mitigation costs for two major emitting sectors: power generation and passenger car transport. This information includes the following:

Power generation

• Factors influencing mitigation costs in power generation
• Mitigation costs and CO2 savings for power generation
• Assumed investment costs, operation and maintenance costs and efficiencies for power generation in the 450 Scenario
• Methodology for calculating mitigation costs in power generation

Passenger car transport

• Mitigation costs and CO2 savings for passenger car transport
• Methodology for calculating mitigation costs in passenger car transport and factors influencing mitigation costs in passenger car transport
• Potential and costs to reduce fuel consumption in passenger car transport