Leszek Kasek World Bank, Europe and Central Asia Region

Skopje, March 1, 2011

Prospects for Green Growth in Macedonia. Methodological approach

Theoretical concept

How to read the cost curve diagram?

MicroMAC curve for Poland 2030

Abatement potential by groups of interventions

Capital expenses and operational cost savings, 2010-2030

DATA requirements

- Reduce GHG emissions as long as Marginal Costs of GHG abatement MAC exceed Marginal Social Costs (MSC)

E emissions $/ton cost per 1 ton CO2 emissions MAC marginal abatement cost MSC marginal social cost (damages caused by E) T cap MC(T) carbon tax

Source: Based on: Jacoby and Ellerman, 2002.

Nuclear

Biomass co-firing

Coal CCS

On-shore wind

Iron & Steel CCS, new built

Biogas

Chemicals CCS, retrofit

Iron & Steel CCS, retrofit

New built efficiency package, residential

Gasoline LDV effectiveness

Recycling new waste

Diesel LDV effectiveness

Retrofit building envelope, commercial

Basic retrofit building envelope, residential

Organic soils restoration

Cogeneration

Biomass dedicated

Off-shore windAverage cost:~10 EUR/tCO2e

0

907060504030 230220210

20

20020 19017016015014012011010010

Emission abatement costEUR/tCO2e

-90

-70

180130

-60

-50

-40

-30

-20

-140

-130

-120

-150

-110

-100

-10

80

70

60

50

30

40

800

10

Landfill – gas electricity generation

Advanced retrofit building envelope –residential

CCS in downstream

Abatement potentialMtCO2e in 2030

Source: McKinsey and Co.

200

225

250

275

300

325

350

375

400

425

450

475

500

525

GHG emissionsMtCO2e annually

503

203020252020201520102005

386

Remaining levers

Energy efficiency

CCS in powerand industry

Low-carbon energy supply

Business-as-usual

Share of total abatement%

29%

42%

15%

14%

-14

21

38

-1

Average costEUR/tCO2e

Total/average 236 MtCO2e 10 EUR/tCO2e

1

2

3

267

4Emissions after reduction

Source: McKinsey and Co.

Required additional investmentAnnual average in each 5-year period, EUR billion

2.5

3.6

5.4

6.9

Share of GDP, %

0.6 0.7 0.9 1.1

2011-2015 2016-2020 2021-2025 2026-2030Period

-0.4

-1.1-1.6

-2.9

Operational cost savings

Annual average in each 5-year period, EUR bn

Shareof GDP, %

0.1 0.2 0.3 0.4

Source: McKinsey and Co.