Jonathan Koomey

Energy and Resources Group
University of California,
Berkeley, CA 94720
January, 1990

Global warming has become of increasing concern both in the scientific community (Hansen 1988, Schneider 1989) and in the popular press (Begley et al. 1988, Lemonick 1989). Because the utility industry is responsible for a substantial fraction of carbon dioxide emissions in the U.S., this sector is likely to be an important focus of policies to mitigate these emissions. Recently, a variety of options, including energy efficiency and tree planting by utilities have been proposed to mitigate urban heat islands and to offset power plant carbon dioxide releases that contribute to global warming (Akbari et al. 1988, Dudek 1988).

This testimony examines methodological questions concerning the value of global warming mitigation. The second section supplies background information about all externalities, including frameworks for discussing energy technologies and their associated external costs. The third section presents the two predominant methods for valuing external costs. The fourth section examines pitfalls in such analyses. The fifth section introduces the concept of Net Cost, which is essential to least-cost analysis of global warming mitigation measures. Finally, the sixth section discusses choosing a number in the face of the many uncertainties.

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