By KENT HOOVER
American City Business Journals

The United States can make significant reductions in future greenhouse gas emissions without wrecking the economy or requiring Americans to make major lifestyle changes, according to a new study by McKinsey & Co.

The management consulting firm's study comes at a critical time in the global-warming debate, as Congress considers legislation that would cap carbon emissions and raise automobile fuel-efficiency standards. Meanwhile, world leaders gathered in Bali, Indonesia, to talk about how to proceed with a new global agreement to reduce greenhouse gases.

Most scientists believe that the burning of fossil fuels such as coal and gasoline has caused the Earth's air and ocean temperatures to increase, and will result in rising sea levels and other adverse environmental consequences.

The McKinsey study, which was co-published with the Conference Board, looked at more than 250 opportunities to reduce greenhouse-gas emissions. It concluded that the United States could cut projected 2030 emissions by one-third to one-half using proven and emerging technologies, but only if the nation acts quickly.

"You can't get there if you don't engage the whole economy at once," said Jack Stephenson, a director in McKinsey's New York office and a co-author of the study.

At least $1 trillion in additional capital spending would be required to achieve these reductions, according to the study.

About 40 percent of the opportunities for greenhouse-gas reductions, however, pay for themselves over their lifetimes, according to the study. Improving energy efficiency in buildings, appliances and industry, for example, could produce net savings while offsetting 85 percent of the additional demand for electricity in 2030, the study contends.

Energy-efficiency measures, however, are "perishable opportunities," said Kenneth Ostrowski, a director in McKinsey's Atlanta office and study co-author. Buildings, for example, have a long life, and if they are built less efficient than they could be, that's a lost opportunity for greenhouse-gas reduction.

The sooner the nation gets started, the more it can reduce greenhouse gases through low-cost means, he said.

‘Temporary drop' in emissions

Last year, greenhouse-gas emissions in the United States dropped 1.5 percent, the third decline since 1990, according to the Energy Information Administration. The agency attributed the decline to a reduction in energy consumption due to mild weather and high energy prices.

President Bush cited the decline as evidence that the United States is "effectively confronting climate change through regulations, public-private partnerships, incentives and strong investment in new technologies."

But Philip Clapp, president of the National Environmental Trust, called the decline a "temporary drop" that had nothing to do with Bush administration policies.

On the eve of the Bali conference, President Bush said the United States "must lead the world to produce fewer greenhouse-gas emissions, and we must do it in a way that does not undermine economic growth or prevent nations from delivering greater prosperity for their people."

Energy bills too costly

Some business lobbyists, however, contend that legislation pending in Congress would undermine economic growth.

A House bill would raise fuel-economy standards for automobiles and require electric utilities to generate at least 15 percent of their power from solar energy, wind or other renewable sources by 2020. Critics contend that that would result in higher electricity rates in many states.

Meanwhile, the Senate is considering a bill that would impose progressively lower caps on greenhouse gas emissions from 2012-50.

The U.S. Chamber of Commerce opposes the legislation. The bill would cost the economy hundreds of billions of dollars and would require "radical changes" to Americans' lifestyles, said chamber Vice President Bill Kovacs.

A better strategy would be to encourage U.S. companies to invest in new technology that would reduce greenhouse gases and then deploy it at emissions sources worldwide, he said.

"We want to make money on reducing CO2 emissions," Kovacs said.

The United States would hurt its economic competitiveness if it imposes carbon caps and China and India don't, he said.

"That's not leading; it's suicide," he said.