ARTICLE IN PRESS

Energy Policy 38 (2010) 3384–3393

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Estimates of GHG emission reduction potential by country, sector, and cost

Keigo Akimoto n, Fuminori Sano, Takashi Homma, Junichiro Oda, Miyuki Nagashima, Masanobu Kii
Research Institute of Innovative Technology for the Earth (RITE), Kyoto, Japan

a r t i c l e in f o a b s t r a c t

Article history: In this study, emission reduction potentials in greenhouse gases (GHG) are assessed by country, sector,
Received 1 September 2009 and cost using a GHG emission reduction assessment model with high resolutions with respect to
Accepted 4 February 2010 region and technology and high consistency in terms of assumptions, interrelationships, and solution
Available online 2 March 2010
principles. Model analyses show that large potential reductions can be achieved at low cost in
Keywords: developing countries and power sectors. In addition, cost-efficient emission reductions were evaluated
Climate change for some international emission reduction targets that have been derived on the basis of the principle of
Emission reduction cost common but differentiated responsibilities among developed and developing countries. If (1) emission
Sectoral approach reduction measures at negative costs and below 50 $/tCO2 for developed countries, (2) intensity
improvement measures for selected sectors at negative costs and below 20 $/tCO2 for major developing
countries, and (3) all emission reduction measures with negative costs for other developing countries in
2020 are adopted, then emission reductions of 8.9, 14.8, and 27.7 GtCO2 eq./yr compared to the
technology-frozen case can be expected in developed countries, major developing countries, and
globally, corresponding to a 11% decrease, 40% increase, and 17% increase from 2005 levels,
respectively. Large-scale emission reductions can be achieved even if CO2-intensity targets for major
sectors are assumed for major developing countries.
& 2010 Elsevier Ltd. All rights reserved.

1. Introduction approaches in determining reduction targets for national emis-

Climate change is a very serious global issue that needs to be
addressed, and large emission reductions are required for
sustainable development. However, it is difficult to implement
measures for effective reductions that involve all the countries.
The Kyoto Protocol was internationally adopted in 1997, and
according to this protocol, national emission reductions are
mandatory only for developed countries. Three of the five largest
greenhouse gas (GHG) emitters in the world, however, do not
participate in or are exempt from binding emission reduction
targets under the protocol, and global emissions have increased
drastically since 1997. Cost-effective measures for emission
reduction need to be explored, particularly to achieve large
emission reductions. In practice, it is important to determine
emission reduction capabilities by country, sector, and cost in
order to determine emission reduction targets and policy
measures at the international level and achieve large emission
reductions.
The Japanese government proposed that a sectoral approach
would be effective for reducing GHG emissions, on both national
and international levels (e.g., see The Japanese government,
2008). The proposal incorporates sector-based or bottom-up
n
Corresponding author. Tel.: + 81 774 75 2304; fax: +81 774 75 2317.
E-mail address: aki@rite.or.jp (K. Akimoto).
sions and presents practical, flexible emission reduction targets
for developing countries, including intensity improvement targets
by sector. Environmental issues such as climate change must be
considered globally, but these issues must be acted on locally.
However, on the international level, we must identify the amount
and cost of reduction associated with different measures accord-
ing to countries and sectors. Moreover, this identification must be
based on the principles of equity and effectiveness. The obtained
information will then help in formulating appropriate interna-
tional policy measures and allow appropriate emission reduction
measures to be implemented globally.
The Intergovernmental Panel on Climate Change (IPCC))
summarized estimates of emission reduction potentials by cost,
region, and sector. These estimates were obtained by both top-
down and bottom-up modeling. The summary of bottom-up
studies states that the reduction potentials in 2030 are 5–7, 9–17,
13–26, and 16–31 GtCO2 eq./yr at costs of below 0, 20, 50, and
100 US$/tCO2 eq., respectively (IPCC, 2007). Large emission
reduction potentials at low costs are estimated for non-OECD
countries and the building sector. However, uniformity across
sectors is not guaranteed because the emission reduction
potentials for different sectors are estimated by different model-
ing teams and are probably based on different assumptions.
Enkvist et al. (2007) estimated the global cost of GHG emission
reduction potentials by adopting a bottom-up approach. Hanaoka
et al. (2008) also assessed emission reduction potentials by cost,

0301-4215/$ - see front matter & 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2010.02.012
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K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393 3385

region, and sector by bottom-up modeling. (Amann et al., 2008;
IIASA, 2009) used a similar approach to assess reduction
potentials.
These approaches essentially evaluate emission reduction
potentials separately for each sector. However, the energy
systems are related across sectors, countries, and points in time.
The emission reduction activities in different sectors, countries,
and points of time affect each other. Therefore, cost-effective
emission reduction measures or emission reduction potentials
across sectors, countries, and time points must be explored
simultaneously under common assumptions by taking into
account the interrelationships among them. The results of
previous studies cannot be applied for satisfactorily evaluating
the sectoral emission reduction potentials for different countries
with consistency. In this study, highly consistent analyses of
emission reduction potentials and reduction costs across coun-
tries, sectors, and points of time are carried out using a systematic
model in which interrelationships are appropriately considered
under common assumptions.
2. Assessment framework
2.1. Overview
To estimate GHG emissions reduction potentials and the
associated costs, the following assessment framework has
been developed for bottom-up modeling. The model consists
of three modules: (1) the key assessment model DNE21+ for
energy-related CO2 emission, (2) an emission scenario for energy-
unrelated CO2 in which it is assumed that specific energy-
unrelated CO2 emissions are independent of emission reduction
levels achieved in energy-related CO2 emissions, and (3) the non-
CO2 GHG assessment model for reducing the five types of GHG
emissions outlined in the Kyoto Protocol. However, CO2 emissions
caused by land use, land use change, and forestry (LULUCF) are
not evaluated in this study. Fig. 1 shows an overview of our
assessment framework (see a paper by RITE (2009) for further
details.).
2.2. Key assumptions
The population estimates of the United Nations (UN, 2006) are
used to predict the population scenario. The global population in
2020 is estimated to be 7.7 billion. The gross domestic product
(GDP) growth rates of the world and the GDPs of major countries
were estimated by the Japan Economics Research Center for the
Mid-term Target Exploratory Council of the Japanese Government
in December 2008. The average annual rates of GDP growth from
2005 to 2020 are 1.9% for the United States, 1.9% for the EU27,
1.3% for Japan, 5.0% for Russia, 8.2% for China, 7.2% for India, and
3.0% for the whole world.
Population and GDP are not directly used to assume conditions
for the energy model but to assume the amount of production or
extent of service activity in individual sectors. The amount of
production or extent of service activity is consistently satisfied by
the optimal combination of various bottom-up technologies for
individual sectors that are explicitly modeled. For other sectors,
baseline amounts of final energy demands are assumed together
with their long-term price elasticities using top-down modeling
without explicitly describing bottom-up technologies.
The historical emissions of total of six kinds of GHGs for Annex
I and non-Annex I countries are based on GHG inventories of
UNFCCC (2009) and IEA Statistics (IEA, 2007), respectively.
Energy-related CO2 emissions are based on IEA Statistics for all
countries. Whereas the statistical data on energy-related CO2
emissions obtained from the UNFCCC inventory differ from those
obtained from the IEA inventory for some countries. Non-CO2
GHG emissions for Annex I countries are defined by subtracting
the energy-related CO2 emissions given by IEA (2007) and the
energy-unrelated CO2 emissions given by UNFCCC (2009) from
the total GHG emissions given by UNFCCC, in order to meet the
total of six kinds of GHG emissions given by UNFCCC for Annex I
countries. Thus, priority is given in ensuring consistency between
the total GHG emissions and the UNFCCC inventory.
2.3. Energy-related CO2 assessment model
The DNE21+ model (Akimoto et al., 2008; Oda et al., 2007)
consistently represents energy systems (e.g., energy flows,

DNE21+ Model Energy - unrelated CO 2 Non - CO2 GHG

Emissions Scenario Assessment Model

•Assessment model for •Projection module for •Assessment model for

energy-related CO2 non-energy CO2 the 5 non-CO 2 GHG
emissions emissions emissions (CH 4, N2O,
• 54 regions in the • 54 regions in the HFCs, PFC, SF 6)
world world • 18 regions in the
• Bottom-up modeling • Estimations of world (allocated to the
(200-300 specific sectoral non-energy 54 regions, based on
technologies are CO2 emissions to be the historical data )
modeled) consistent with GDP •The methodology is
and production similar to the USEPA
activities assessment

Estimates of the 6 GHG emissions, emission reduction costs

and potentials, and specific cost-effective measures for
emission reductions

Note: LULUCF is excluded for the estimates.

Fig. 1. Overview of assessment framework. Note: LULUCF is excluded for the estimates.
 ARTICLE IN PRESS
3386 K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393

capacities of energy-related facilities, and performances and costs
of various technologies) in which the worldwide costs are to be
minimized, with the amounts of production activity (e.g., the
production amounts of crude, steel, and cement), the amounts of
service activity (e.g., the traffic amount in the transportation
sector), and the final energy demands in other top-down sectors
being met by the best combination of technologies. When any
emission restriction (e.g., an upper limit of emissions, emission
reduction targets, targets of energy or emission-specific unit
improvements, or carbon taxes) is applied, the model specifies the
energy systems whose costs are minimized and still meet all the
assumed requirements. The salient features of the model include
(1) analysis of regional differences with fine regional segregation
while maintaining common assumptions and interrelationships,
(2) a detailed evaluation of global warming measures by modeling
around 300 specific technologies that can be used to counter
global warming, and (3) explicit considerations on facility
transition for the specific technologies over the entire time period.
The model can be used to perform cost minimization assuming
perfect knowledge of the future, without taking into account the
decision making under uncertainties such as factors related to
energy price volatility. In addition, the lead time is not taken into
account while constructing large-scale facilities such as electric
power plants that often requires a long lead time. Furthermore,
the model treats costs by exogenous technology learning or
exogenous cost reductions. Cumulative installation of some new
technologies will induce their investment costs; however, this
model assumes their future costs independent of the cumulative
installation. Although this is also one of the weaknesses of this
estimation, the target year of this estimation is the year of 2020
that remain only about 10 years and the drastic cost changes will
be limited. Implications from the model analysis results should
accordingly and prudentially be drawn by recognizing such
limitations.
The energy supply sectors are closely related to the energy
end-use sectors, including energy export/import, and the lifetimes
of facilities are taken into account so that assessments are made
while maintaining complete consistency across the energy
systems. In this study, intertemporal optimization is carried out
for the period between 2000 and 2030. The world is divided into
54 regions to consider differences such as those in economic
growth, industrial structure, current energy efficiency by sector,
and availability of fossil and renewable energy resources.
2.3.1. Technology considerations
The technologies considered in this study are listed in Table 1.
Both widely used technologies and novel technologies, which are
expected to change within the time period of evaluation, are
considered. Facility vintages are considered for the technologies
in the model.

Table 1
Bottom-up technologies in DNE21 + .

Sector Technologies

Electricity Coal power {low efficiency (subcriticality), mid-efficiency (supercriticality), high efficiency (extra supercriticality—integrated coal gasification
combined cycle (IGCC)/integrated coal gasification fuel cell combined cycle (IGFC)), IGCC with precombustion CO2 capture}, oil power {low
efficiency (diesel generator, etc.), mid-efficiency (subcriticality), high efficiency (supercriticality), combined heat and power (CHP)}, synthetic
oil power {mid-efficiency, high efficiency}, natural gas power {low efficiency (steam turbine), mid-efficiency (conventional natural gas
combined cycle (NGCC)), high efficiency (high-temperature NGCC), CHP, oxy-fuel combustion}, biomass power {low efficiency, high
efficiency}, nuclear power {conventional, next generation (Generation IV, etc.)}, hydro/geothermal power, wind power, photovoltaics, power
storage system for wind/PV, hydrogen power, electrical cable {conventional, superconducting high efficiency}, carbon dioxide capture and
storage (CCS) {post-combustion capture; applicable for coal, oil, synthetic oil, natural gas, biomass power}
Other energy supply Oil refinery, gas reforming, gas liquefaction, coal liquefaction, coal gasification, biomass fermentation, biomass liquefaction, biomass
gasification, and water electrolysis
Industry
Iron and steel Blast furnace and basic oxygen furnace (BF-BOF) {low efficiency (small scale), mid-efficiency (large scale), high efficiency (large scale,
equipped with coke dry quenching (CDQ), top-pressure recovery turbine (TRT), recovery of by-product gases), next generation (super coke
oven (e.g., SCOPE 21), utilizing plastic wastes and tire wastes, as well as highly efficient equipment), iron production by hydrogen reduction},
coke oven gas (COG) recovery {externally attachable to low/mid-efficient BF-BOF}, Linz–Donawitz converter gas (LDG) recovery, CDQ/TRT
{externally attachable to mid-efficient BF-BOF}, direct reduction {natural gas base (mid/high efficiency), hydrogen gasification base}, scrap-
used electric arc furnace (Scrap-EAF) {low efficiency (small scale), mid-efficiency (tri-phase electric arc furnace), high efficiency (DC water-
cooled walls arc furnace equipped with scrap preheating)}, CCS {applicable to BF-BOF}
Cement Small-scale facilities: vertical kiln, wet rotary kiln, dry rotary kiln, suspension preheater/new supension preheater (SP/NSP) dry rotary kiln,
advanced fluidized bed shaft furnace {equipped with SP/NSP, efficient clinker coolers}
Large-scale facilities (more efficient than small-scale ones): wet rotary kiln, dry rotary kiln, SP/NSP dry rotary kiln, SP/NSP dry rotary kiln (high
efficiency) {equipped with efficient clinker coolers, SP with 5 or 6 levels, efficient waste heat recovery}
Pulp and paper Chemical pulp {low efficiency, mid-efficiency, high efficiency, next generation}, paper recycling {low efficiency, mid-efficiency, high
efficiency}, milling paper {low efficiency, mid-efficiency, high efficiency, next generation}, black liquid recovery and use {low efficiency, high
efficiency}, paper sludge boilers, and steam turbine power systems
Aluminum Söderberg aluminum production, and prebake aluminum production
Chemical Ethylene/propylene: naphtha cracking {low efficiency, mid-efficiency, high efficiency, next generation}, other production {ethane cracker, etc.;
low efficiency, mid-efficiency, high efficiency}
Ammonia: from coal {low efficiency, mid-efficiency, high efficiency}, from oil {low efficiency, mid-efficiency, high efficiency}, and from natural
gas {low efficiency, mid-efficiency, high efficiency}
Transportation Types: small passenger car, large passenger car, bus, small truck, and large truck,
internal combustion engines (gasoline/diesel) {conventional internal combustion cars (low/high efficiency), hybrid cars, plug-in hybrid cars},
electric cars, fuel cell cars, alternative fuels {bioethanol mixed with gasoline, biodiesel mixed with diesel, and compressed natural gas (CNG)}
Residential and Refrigerator {low efficiency, mid-efficiency, high efficiency}, lighting {small bulb, small fluorescent light, small next generation (light-emitting
commercial diode (LED), etc.), medium-size mid-efficiency fluorescent light, medium-size high efficiency fluorescent light, medium-size next generation
(LED, organic light-emitting diode (OLED), etc.), large-size mid-efficiency high intensity discharge (HID), large-size high efficiency HID, large-
size next generation (LED, etc.)}, television {small-size low-efficiency, small-size high efficiency, large-size low-efficiency, large-size high
efficiency, large-size next generation (high efficiency liquid crystal television, plasma, rear projection, OLED)}, air conditioner {low efficiency,
mid-efficiency, high efficiency}, gas cooking stove {low efficiency, mid-efficiency, high efficiency}

Note: Transportation and distribution infrastructures of energy carriers are also explicitly modeled.
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2.3.2. Payback time
The assumption for payback time for the investment of
technologies is one of the key factors for estimations of marginal
abatement costs. The payback period is calculated on the basis of
numerous socio-economic factors such as the interest rate,
income and financial leeway, subjective preference for risk-
avoidance, and expected profit rate of stockholders. The return
on investment (ROI) is generally 10–20%, corresponding to a
payback period of 5–10 years. Table 2 shows the assumed
payback periods when considering such situations.
2.3.3. Nuclear power scenario
Nuclear power is a key technology for CO2 emission reduc-
tions, but there are key factors other than cost that need to be
considered, including the lead time and the public acceptance of
the use of nuclear power. Therefore, exogenous scenarios are
assumed for nuclear power generation, as presented in Table 3.
The generation is estimated from national plans of nuclear power
plant construction and their current status (IEEJ, 2008).
2.4. Energy-unrelated CO2 emission scenario
Exogenous scenarios that are fixed regardless of individual
mitigation options are assumed. One specific scenario is applied
for each source. The assumed emission sources are industrial
processes, including raw material productions, fugitive, waste and
other sectors.
In the scenario of the energy-related CO2 assessment model,
the increase in the production of raw materials such as cement,
steel, and aluminum is assumed to be moderate in Annex I
countries. Accordingly, the increase in the energy-unrelated CO2
emissions is also gradual (reduces or reaches a constant level) in
developed countries. In the scenario, developing countries such as
China and India are assumed to demonstrate increased raw
Table 2
Assumed payback periods.
Payback periods
(years)
Upper
limit
Electricity generation sector 10
Other energy conversion sector 7 4.7
Industrial sector (energy-intensive industry) 10
Transportation sector (purchase of environment- 5 3.3
conscious products) (10)
Residential and commercial 3 2.0
Note: Payback periods for different regions are assumed to be within the above
limits, depending on the regions’ per-capita GDP. The duration of the payback
period increases with the per-capita GDP. The number of people who purchase
automobiles with long payback periods (i.e., the purchase of environment-
conscious products) is assumed to increase with the per-capita GDP.
Table 3
Scenarios for nuclear power generation (TWh/yr).
2005
Japan 305
United States 811
EU27 987
Russia 149
China 53
India 17
Worldwide total 2767
material production and are generally associated with sharp
increases in energy-unrelated CO2 emissions.
Fugitive emission in most countries, including those in the
Middle East, is decreasing owing to continuous efforts to
effectively utilize associated gases and to reduce flare. Canada
has also made efforts in this direction, but it shows the highest
rate of increase among developed countries because of a large
increase in the production of oil and natural gas, including
unconventional oil.
In the case of developing countries, there is a lack of reliable,
globally consistent regional data on estimates of future energy-
unrelated CO2 emissions from waste and other sources. Therefore,
emissions from waste and other sources are assumed to be
constant over the evaluated time periods.
2.5. Non-CO2 GHG assessment model
The non-CO2 GHG assessment model is derived from the study
by Hyman et al. (2003). The model converts bottom-up assess-
ments of mitigation technologies performed by the USEPA (2002)
to a proxy model using elasticity (Dowaki et al., 2006). However,
in this study, the historical emission of non-CO2 GHGs was
adjusted using the UNFCCC inventory (UNFCCC, 2009) and the IEA
statistics (IEA, 2007) for Annex I countries and non-Annex I
countries, respectively. The emission mitigation costs and poten-
tials were modified using new technology assessments performed
by the USEPA (2006b). The baseline emissions were estimated
using the common assumptions for population and GDP adopted
in this study. The model considers five types of emissions: CH4 in
seven sectors, N2O in six sectors, hydrofluorocarbons (HFCs) in
one sector, perfluorocarbons (PFCs) in one sector, and SF6 in one
sector for 18 regions. To ensure consistency with 54 regions in the
DNE21+ model for analyses of energy-related CO2, the historical
data on emissions in the base year are used and distributed
among 54 regions.
2.5.1. Baseline emission
CH4 emissions were considered in seven sectors: agriculture,
oil, coal, natural gas, residential, transportation, and energy-
intensive industries. N2O emissions were considered in six
Lower sectors: agriculture, oil, natural gas, residential, transportation,
limit
and energy-intensive industries. HFCs, PFCs, and SF6 emissions
6.7
were considered for one macro-sector each. The sectoral baseline
emissions were estimated as described below.
6.7 (1) CH4 and N2O
2.5.1.1. Agriculture sector. The baseline emission of methane for
the agriculture sector was estimated by region for six groups: rice
cultivation, grassland burning, agricultural residue burning,
enteric fermentation, livestock manure, and land use change. The
emission from rice cultivation was estimated according to the
population of the relevant regions using the estimation method
proposed by the USEPA (2006a). The emission from grassland
burning was estimated on the basis of the study by Masui et al.
(2001), where the emissions are assumed to vary depending on
the meadow areas estimated by cropland growth rates, which are
presented in the IPCC Special Report on Emissions Scenarios
2020 (SRES) B2 scenario (IPCC, 2000). FAOSTAT data (FAO, 2009) were
used to estimate the regional meadow areas for the base year. The
437
873 emissions from enteric fermentation and livestock manure were
965 estimated using the method described by the USEPA (2006a) and
346 the relevant number of livestock provided by IFPRI (1999). The
282 numbers of livestock were estimated using the method of Masui
124
3677
et al. (2001), and grazing areas were assumed from the growth
rates of cropland areas estimated in the IPCC SRES B2 scenario.
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3388 K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393
The emission from enteric fermentation was estimated by main-
taining a fixed emission intensity in accordance with the IPCC
guidelines (IPCC, 1996). The emission from land use change,
which may naturally be assumed to arise from burnt or rotten
biomass waste, was estimated to be inversely proportional to the
conversion of natural grassland and forest areas in the SRES B2
scenario.
The N2O baseline emission in the agriculture sector was
estimated by region for seven groups: emissions from soil and the
six groups considered for CH4 emissions from the agriculture
sector. N2O emissions from these six groups of the agriculture
sector were estimated using the same methods as those used for
estimating CH4 emission from the agriculture sector. As for N2O
emissions from soil, the sum of emissions caused by usage of
chemical fertilizers, nitrogen-fixing plants, crop residues, and
other sources were estimated. The future emissions from
chemical fertilizers were estimated using the estimation methods
of Tilman et al. (2001), Masui et al. (2001), and the USDA (2003).
Time-series regression with population and per-capita GDP was
also used to obtain this estimate. The emissions from nitrogen-
fixing plants, crop residues, and other sources were estimated
using the method proposed by the USEPA (2006a). The emissions
from nitrogen-fixing plants were estimated using production data
for soybean and edible seeds. The future productions were
estimated up to 2015 using the future projection data of FAOSTAT
(FAO, 2009) and IFPRI (IFPRI, 1999). Thereafter, the baselines were
estimated using the cultivation areas that were associated with
the cropland areas in the SRES B2 scenario. The emissions from
crop residues were estimated using the cultivation areas of rice
and oats along with the abovementioned nitrogen-fixing plants.
Emissions from other sources were estimated by multiplying the
aforementioned numbers of livestock by the N2O-emission-
specific units of nitrogen contained in livestock manure.
2.5.1.2. Oil, coal, and natural gas sectors. The baseline emissions for
oil, coal, and natural gas sectors were estimated using the per-
capita GDP scenario and the productions for oil, coal, and natural
gas were estimated by the USDOE EIA (2005).
2.5.1.3. Residential and transport sector. The emissions from
transportation, landfills, and sewerage were considered. For
transportation, the baseline emissions were estimated using the
per-capita GDP scenario and the USDOE EIA estimation of energy
demands for the transportation sector. These baseline emissions
were consistent with the results obtained using the methods
provided by the USEPA (2006a). For landfills and sewerage, the
methods used were consistent with the methods explained by
the USEPA (2006a), and the baselines were estimated using
per-capita GDP.
2.5.1.4. HFCs, PFCs, and SF6. The baseline emissions were esti-
mated using the SRES B2 scenario for each of the four regions the
world was divided into. The emissions for further divided regions
or countries were estimated according to the GDP shares of each
region or country in the four SRES regions.
2.5.2. Methods for estimating emission reduction potentials for non-
CO2 GHG
The assessment model for non-CO2 GHG mitigation potentials
is based on the assessments performed by the USEPA (2002,
2006b) and Hyman et al. (2003). Eq. (1) indicates the relationship
between the individual non-CO2 GHG mitigation ratio and
marginal abatement costs evaluated using the elasticity. In this
study, the non-CO2 GHG mitigation in 18 regions is estimated
when the non-CO2 GHG abatement costs are equalized to CO2
marginal abatement costs. The elasticity is determined such that
the marginal abatement cost curves correspond to the USEPA
estimates obtained separately for each sector and type of gas. The
estimates are calculated using a technology database for non-CO2
GHG measures. Thus, the model used here is not a direct bottom-
up model; however, marginal costs and potentials of non-CO2
GHG mitigation are essentially based on the bottom-up analysis
of the USEPA.
The elasticity in the model developed by Hyman et al. (2003) is
essentially applied to the RITE model, but the elasticity is adjusted
to be consistent with the result of analysis for a 20%/yr discount
rate, which is close to the rate usually observed in decision
makings of socio-economic activities, taking into consideration
the results of sensitivity analysis for the discount rate (payback
period) carried out by the USEPA (2002). The elasticity is also
partially adjusted on the basis of the mitigation effect report of
the USEPA (2006b). The elasticity of gases and the mitigation
potentials in this study are estimated to be less than those
reported by Hyman et al. (2003)
 sðg;h;nÞ
1
Red_rðg; h; n; tÞ ¼ 1 ð1Þ
Pðg; h; n; tÞ
where g represents the gas; h, the sector; n, the region; and t, the
year. Red_r(g,h,n,t) is the reduction rate for the total emission,
P(g,h,n,t) is the marginal abatement cost, and s is the elasticity
derived on the basis of studies by the USEPA (2002, 2006b) and
Hyman et al. (2003).
3. Emission reduction potentials by country, sector, and cost
3.1. National Perspectives
GHG emission reduction potentials by country, sector, and cost
were estimated using the above assessment models with high
resolution with respect to regions and sectors. Projections of the
baseline emission are required to determine the emission
reduction potentials. However, obtaining these projections is very
difficult. In this paper, two types of baseline emissions with
relatively rigid definitions are introduced: (1) the technology-
frozen (TF) case and (2) the negative cost measures achieved
(NCA) case. The baseline emission in the TF case is defined such
that the CO2 intensity is fixed at 2005 levels until 2030 and the
contributions of future sectoral activities (e.g., production of crude
steel) are maintained at the assumed baseline. The baseline
emissions in the NCA case are obtained from the energy model
calculation of cost minimization without any climate-specific
constraints or without any global warming damage being
considered for all the adopted negative cost measures. The
baseline emissions of non-CO2 GHGs are defined on the basis of
the NCA case.
Table 4 shows the emission reduction potentials compared to
the TF case, presented by country and cost. Around the world,
there are large emission reduction potentials with negative cost
measures, particularly in major developing countries. This means
that a large number of opportunities exist for emission reductions
through technology transfer and technology diffusion, particularly
in developing countries. Emission reduction by negative cost
measures is not easy to achieve in some developing countries
because of barriers in their implementation, including technology
availability and high interest rates.
The emission reduction potentials compare to the TF case and
the NCA case due to measures at negative costs and below
50 $/tCO2 in Annex I countries are about 8.3 and 3.6 GtCO2 eq./yr,
respectively (please note that all the monetary costs in this paper
are designated by the 2000 year price.). This means that the
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Table 4
GHG emission reduction potentials compared to the TF case in 2020 by cost (MtCO2 eq./yr).

Emission in 2005 Emission in 2020 in the TF case Emission reduction potentials compared to the TF case in 2020

r 0 $/tCO2 (NCA case) r20 $/tCO2 r 50 $/tCO2 r 100 $/tCO2

US 7107 9226 1686 2391 3121 4331

EU27 5132 6770 1214 1817 2186 2565
Japan 1358 1554 142 180 223 325
Russia 2123 3577 1190 1599 1732 1848
China 7410 20,334 6908 10,578 12,190 12,918
India 2244 6934 3310 4285 4397 4543
Annex I 17,652 23,933 4716 6821 8282 10,320
Other OECD countries 1155 1677 207 503 613 718
Major developing countries 11,832 31,365 11,374 16,573 18,587 19,585
Other non-Annex I 8027 15,754 3939 6244 7006 7491
World 38,666 72,729 20,235 30,142 34,487 38,114

Notes: ‘‘Other OECD countries’’ are the Republic of Korea and Mexico, and ‘‘major developing countries’’ are Brazil, China, India, Indonesia, and South Africa, which
participate in the Major Economies Forum on Energy and Climate (MEF) along with Australia, Canada, the European Union, France, Germany, Italy, Japan, Russia, the United
Kingdom, and the United States. The emission reduction potentials at a cost of below 0 $/tCO2 include the emission reductions of non-CO2 GHGs from the TF case to the
baseline emissions, although the reduction costs are not necessarily negative. The emission reduction potentials due to carbon capture and storage are excluded owing to
the uncertainty of its widespread use globally.

expected emission in Annex I countries is 11% less than the 2005
level (15% less than the 1990 level). If all the measures are
implemented at negative costs and below 50 $/tCO2, the emis-
sions are 14%, 11%, 2%, and 13% less than the 2005 levels in the
United States, EU27, Japan, and Russia, respectively. The reduction
potentials from the 2005 level are relatively small in Japan
because high energy efficiencies have already been achieved. The
energy efficiency in Russia is relatively low, but high economic
growth is expected in the future, and therefore, the emission
reduction potentials are almost at the same levels as those of the
United States and EU27.
On the other hand, there is a large potential for emission
reductions from the TF case at negative costs and below 50 $/tCO2
in major developing countries, up to approximately 19 GtCO2
eq./yr. The potential for global emission reductions from the TF
case at a cost of below 20–50 $/tCO2 including negative cost are
approximately 30 and 34 GtCO2 eq./yr, corresponding to a 10%
increase and 1% decrease relative to the emission level in 2005,
respectively.
The IPCC reported that the global potentials of emission
reductions in 2030 are 5–7, 9–17, 13–26, and 16–31 GtCO2 eq./yr
at costs of below 0, 20, 50, and 100 US$/tCO2 eq., respectively
(IPCC, 2007). Two large differences should be noted between
the estimates by IPCC and this study: the target year and the
definition of baseline emissions. This study estimates the poten-
tial in 2020, while the IPCC reported the potential in 2030. The
baselines are defined by TF and NCA cases without ambiguity
and with consistency in this study, while the baseline reported
by the IPCC is not. Thus, the potentials only above 0 US$/tCO2
eq. between two studies should be compared recognizing the
differences in the target year. The emission reduction potentials of
0–20, 20–50, and 50–100 US$/tCO2 eq. estimated by this study
are 10, 4, and 4 GtCO2 eq./yr, respectively, while the emission
reduction potentials of 0–20, 20–50, and 50–100 US$/tCO2 eq. in
the IPCC report are 4–10, 4–9, and 3–5 GtCO2 eq./yr, respectively.
The reduction potentials should not be directly compared due to
the differences in the target year; however, the global reduction
potentials are nearly consistent with two studies.
3.2. Sector perspectives
Cost-effective emission mitigation measures differ across
countries owing to differences in industrial structures, current
energy efficiency levels, renewable energy potentials, expected
future economic growth, and other factors. Fig. 2 shows the
distribution of emission reduction potentials by sector, country,
and cost. There is great potential for emission reductions at
negative costs in the form of energy efficiency improvements in
the power sector, along with improved vehicles and various
control measures for improving traffic flow in the transportation
sector. In addition, large emission reduction potentials in the
range from 0 to 20 $/tCO2 are expected in the power sector,
mainly due to energy efficiency improvement in coal power,
particularly in developing countries. Large emission reduction
potentials in this cost range are also evident in the agriculture and
waste sectors for non-CO2 GHGs. Furthermore, the emission
reduction potentials in (1) the wind power sector, (2) the energy-
intensive sector (where energy reductions are mainly achieved via
halocarbon emission reduction measures), and (3) the energy
conversion sector (where energy reductions are mainly achieved
via methane emission reduction measures in natural gas
production) are large in the United States, Japan, and Russia,
respectively. Large emission reduction potentials in the range
from 20 to 100 $/tCO2 are expected after switching from coal
power to gas power plants.
Carbon capture and storage technology have the potential to
result in large emission reduction at a relatively low cost;
however, they are not included in the figures because they were
excluded from the evaluations across countries and sectors owing
to large uncertainties in implementation. In addition, the emis-
sion reduction potentials of nuclear power are presented only in
the figure for the negative cost range because nuclear power is
assumed to be part of a fixed exogenous scenario.
4. Expected emission reductions under common but
differentiated scenarios
Equalizing marginal reduction costs across countries can help
globally to achieve a certain reduction at the least cost. However,
developed countries should make greater efforts to reduce their
emissions, given that they are responsible for past emissions
accumulated in the atmosphere and given their current capabil-
ities. The expected emission reductions under different targets for
developed and developing countries are presented in Table 5.
In the NCA case, it is assumed that all countries undertake all
the emission reduction measures that have negative costs. In
Case 20-0, it is assumed that all measures that have negative
costs and below 20 $/tCO2 are adopted by developed countries
 ARTICLE IN PRESS
3390 K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393

(Annex I and OECD countries) and those that have negative costs
are adopted by developing countries. In Case 50-0, it is assumed
that developed countries and developing countries reduce their
emissions by adopting all measures that have negative costs and
below 50 $/tCO2 and those that have negative costs, respectively.
From the viewpoint of avoiding dangerous climate change, it
might be insufficient to carry out emission reductions only in
developed countries, and there are large reduction potentials at
low costs available to developing countries, as discussed in the
previous section. On the other hand, many developing countries
whose rates of economic growth are high and whose emissions
are expected to grow rapidly would find it difficult to accept
national emission caps. Considering these circumstances, two
additional cases are considered to examine the reduction efforts
among countries in accordance with the principle of common but
differentiated responsibilities. In Case 50-20a, it is assumed that
developed countries adopt all measures at negative costs and
below 50 $/tCO2, and that major developing countries adopt all
measures at negative costs and below 20 $/tCO2 as a macro-CO2-
intensity target (per-GDP greenhouse gas emissions by country
are assumed to be reduced by the carbon price corresponding to
20 $/tCO2.). In Case 50-20b, it is assumed that all measures at
negative costs and below 50 $/tCO2 are adopted by developed
countries and that those at negative costs and below 20 $/tCO2
are adopted by major developing countries; however, for major
developing countries, measures only apply to energy-intensive
sectors (i.e., iron and steel, cement, and aluminum sectors) as an
energy-intensity target and high-emission sectors (i.e., power and
transportation sectors) as a CO2-intensity target.
Fig. 3 shows the emission reduction potentials compared to
the TF case. The emission reduction potentials achieved by
measures at cost of below 50–100 $/tCO2 including negative
cost measures in Annex I countries are 8.3 and 10.3 GtCO2 eq./yr,
respectively, as presented in the previous section. The potential
corresponds to reductions of 11% and 23% compared to the 2005
level and 15% and 26% compared to the 1990 level. Large emission

Power sector: Fuel switching

United States among fossil fuels
Power sector: Efficiency
EU-27 improvement
Power sector: Wind power
Japan
Power sector: Other renewables
Russia Power sector: Nuclear power

China Other energy conversion sectors

India Energy intensive industries

Other industries
Annex I & OECD
Transportation sector
Major developing
countries Residential&Commercial sector
Other developing
countries Agriculture
0 20 40 60 80 100 Waste
GHG emission reduction potentials [%]

Power sector: Fuel switching

United States among fossil fuels
Power sector: Efficiency
EU-27 improvement
Power sector: Wind power
Japan
Power sector: Other renewables
Russia Power sector: Nuclear power

China Other energy conversion sectors

India Energy intensive industries

Other industries
Annex I & OECD
Transportation sector
Major developing
countries Residential&Commercial sector
Other developing
countries Agriculture
0 20 40 60 80 100 Waste
GHG emission reduction potentials [%]

Fig. 2. Sectoral emission reduction potentials from TF case by region in 2020. (a) r 0 $/tCO2 (from TF to NCA cases), (b) 0–20 $/tCO2, (c) 20–50 $/tCO2, and (d) 50–100 $/t
CO2. Notes: the figures show the sectoral contributions to the emission reduction potentials shown in Table 4. Emission reductions achieved by switching from coal power
to gas combined power are divided and distributed among power sector: efficiency improvement (as gas combined power is generally more efficient than coal power) and
power sector: fuel switching among fossil fuels. The emission reduction potentials at a cost below 0 $/tCO2 include the emission reductions of non-CO2 GHGs from the TF case
to the baseline emissions, although the reduction costs are not necessarily negative.
 ARTICLE IN PRESS
K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393 3391

Power sector: Fuel switching

United States among fossil fuels
Power sector: Efficiency
EU-27 improvement
Power sector: Wind power
Japan
Power sector: Other renewables
Russia Power sector: Nuclear power

China Other energy conversion sectors

India Energy intensive industries

Other industries
Annex I & OECD
Transportation sector
Major developing
countries Residential&Commercial sector
Other developing
countries Agriculture
0 20 40 60 80 100 Waste
GHG emission reduction potentials [%]

Power sector: Fuel switching

United States among fossil fuels
Power sector: Efficiency
EU-27 improvement
Power sector: Wind power
Japan
Power sector: Other renewables
Russia Power sector: Nuclear power

China Other energy conversion sectors

India Energy intensive industries

Other industries
Annex I & OECD
Transportation sector
Major developing
countries Residential&Commercial sector
Other developing
countries Agriculture
0 20 40 60 80 100 Waste
GHG emission reduction potentials [%]

Fig. 2. (Continued)

Table 5
Assumed cases.

Case Developed countries Major developing countries Other developing

(Annex I and OECD) ($/tCO2) countries

NCA case 0 0 $/tCO2 0 $/tCO2

Case 20-0 20 0 $/tCO2
Case 50-0 50 0 $/tCO2
Case 100-0 100 0 $/tCO2
Case 50-20a 50 Macro-CO2-intensity target corresponding to 20 $/tCO2
Case 50-20b 50 CO2/energy-intensity target for selected sectors corresponding to 20 $/tCO2

Note 1: ‘‘Major developing countries’’ are Brazil, China, India, Indonesia, and South Africa. The selected sectors for intensity targets in major developing countries are power,
iron and steel, cement, aluminum, and transportation sectors.
Note 2: All measures at a cost of below the indicated cost are assumed to be adopted.

reduction is expected in Case 50-20a, and the emission reduction
potential compared to the TF case in major developing countries
is 16.6 GtCO2 eq./yr. The reduction potential in major developing
countries is 14.8 GtCO2 eq./yr even in Case 50-20b, in which it is
assumed that measures are adopted at negative costs and below
20 $/tCO2 only in energy-intensive sectors and high-emission
sectors.
International discussions have led to calls for Annex I countries
to achieve GHG emission reductions of 25–40% from 1990
levels by the year 2020. The required reductions from the emis-
 ARTICLE IN PRESS
3392 K. Akimoto et al. / Energy Policy 38 (2010) 3384–3393

from the TF case to the baseline emissions, although the reduction

costs are not necessarily negative.

GHG emission reduction compared to the TF case [MtCO2eq./yr]

30000 Corresponding to the required emission
reduction of 40% from 1990 level in Annex I

Emission reduction of 25% in Annex I Major developing countries

($0-$20/tCO2)
25000
Developed countries
($50-$100/tCO2)
NCA case
20000 Developed countries
($20-$50/tCO2)

Developed countries
15000 ($0-$20/tCO2)

Other developing countries

( $0/tCO2)
10000
Major developing countries
( $0/tCO2)
5000 Developed countries (
$0/tCO2)

0
se

-0

-0

0a

0b
0-
20

50
ca

-2

-2
10

50

50
e

e
A

as

as

e
C

as

e
N

as

as
C

Fig. 3. Expected reductions in GHG emission in 2020.

sion level of Annex I countries in 2005 are 3.8 and 6.6 GtCO2 several cooperative measures adopted by seven member countries
eq./yr in 2020 for 25% and 40% reductions, which correspond to (the member countries include both developed and developing
5.4 and 8.2 GtCO2 eq./yr compared to the NCA case, respec- countries). There is a need for strong action at the international level,
tively. The required emission reductions are also shown in Fig. 3. and estimates of emission reduction potentials by country, sector,
In Case 50-20b, it is expected that emission reductions will be and cost would be greatly helpful in this regard.
achieved through global cooperation among developed and Model analyses show that there are large emission reduction
developing countries. potentials available to developing countries at low costs. Such
The additional costs to developed countries in shifting from emission reduction opportunities should be utilized. However,
the NCA case to Cases 50-0 and 100-0 are 77 and 231 billion US$/ emission reduction targets that take into account the principle of
yr, respectively. On the other hand, the cost to major developing common but differentiated responsibilities among developed and
countries is 101 billion US$/yr in Case 50-20b. The cost in Case 50- developing countries should also be considered. Large-scale
20 b corresponds to 55 and 30 US$/yr in terms of the per-capita emission reductions would be achieved if, for example, only
cost in developed and major developing countries, corresponding CO2-intensity measures at negative costs and below 20 $/tCO2
to per-GDP costs of 0.2% and 0.8%, respectively. In this paper, the are adopted for major sectors in major developing countries.
cost burden is not discussed; however, if half the cost for reducing For achieving low-cost opportunities of emission reductions and
emissions in major developing countries is simply assumed to be successfully avoiding dangerous climate change, one of the
covered by developed countries, the total costs of reductions are proposed schemes will consist of (1) flexible targets (including
128 and 50 billion US$/yr in developed and major developing intensity targets) for selected sectors, (2) financial support by
countries, respectively. developed countries to developing countries for their emission
reductions, and (3) developments of technology transfer schemes.

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