Strategies for cost-effective carbon reductions: a sensitivity analysis of alternative scenarios

Analyses of alternative futures often present results for a limited set of scenarios, with little, if any, sensitivity analysis to identify the factors affecting the scenario results. This approach creates an artificial impression of certainty associated with the scenarios considered, and inhibits understanding of the underlying forces. This paper summarizes the economic and carbon savings sensitivity analysis completed for the Scenarios for a Clean Energy Future study (Interlaboratory Working Group, 2000). Its 19 sensitivity cases provide insight into the costs and carbon-reduction impacts of a carbon permit trading system, demand-side efficiency programs, and supply-side policies. Impacts under different natural gas and oil price trajectories are also examined. The results provide compelling evidence that policy opportunities exist in the United States to reduce carbon emissions and save society money.