Last week, the International Energy Agency (IEA) released a report which estimated that cutting CO2 levels in half by 2050 would cost $45 trillion. According to Roger Pielke Jr., these estimates are very dependent on the “spontaneous decarbonization” of economic activity. There is obviously some “spontaneous decarbonization” that occurs in economies. Energy efficiency means that less energy (and carbon dioxide emissions) are required to produce the same amount of work. For example, from 1990 through 2000, the the US used 1.6% less carbon dioxide per dollar of GDP per year. That’s a pretty impressive improvement.

If you don’t assume this kind of spontaneous decarbonization, reducing CO2 concentrations in half will cost between $255 trillion and $545 (far more than IEA’s estimate of $45 trillion). What will it cost to reduce CO2 levels in half? Who knows, but these estimate tells us that that IEA’s projections are very sensitive to these assumptions. This pretty sobering when we are talking about trillions of dollars of cost.