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Marginal abatement cost

 

Marginal abatement cost

A marginal abatement cost curve or MAC curve is a set of options available to an economy to reduce pollution. They are valuable tools in understanding emissions trading, driving forecasts of carbon allowance prices, prioritizing investment opportunities, and shaping policy discussions.

Typically, MAC curves cover emissions reduction opportunities across a number of sectors in an economy including power, industry, waste, buildings, transport, agriculture, and forestry.

Contents

  • Usage 1
  • Criticism 2
  • Examples of existing MAC curves 3
  • See also 4
  • References 5

Usage

For example, carbon traders use marginal abatement cost (MAC) curves to derive the supply function for modelling carbon price fundamentals. Power companies may employ MAC curves to guide their decisions about long-term capital investment strategies to select among a variety of efficiency and generation options. Economists have used MAC curves to explain the economics of interregional carbon trading.[1] Policy-makers use MAC curves as merit order curves, to analyze how much abatement can be done in an economy at what cost, and where policy should be directed to achieve the emission reductions.

However, MAC curves should not be used as abatement supply curves (or merit order curves) to decide which measures to implement in order to achieve a given emission-reduction target. Indeed, the options they list would take decades to implement, and it may be optimal to implement expensive but high-potential measures before introducing cheaper measures.[2]

Criticism

The way that MAC curves are usually built has been criticized for its lack of transparency and the poor treatment it makes of uncertainty, inter-temporal dynamics, interactions between sectors and ancillary benefits.[3]

Examples of existing MAC curves

Various economists, research organizations, and consultancies have produced MAC curves. Bloomberg New Energy Finance[4] and McKinsey & Company[5] have produced economy wide analyses on greenhouse gas emissions reductions for the United States. ICF International[6] produced a California specific curve following AB-32 legislation as have Sweeney and Weyant.[7]

The Wuppertal Institute for Climate, Environment and Energy produced several marginal abatement cost curves for Germany (also called Cost Potential Curves), depending on the perspective (end-user, utilities, society).[8]

The US Environmental Protection Agency has done work on a MAC curve for non carbon dioxide emissions such as methane, N2O, and HFCs.[9] Enerdata and LEPII-CNRS (France) produce MAC curves with the POLES model for the 6 Kyoto Protocol gases.[10] These curves have been used for various public and private actors either to assess carbon policies [11] or through the use of a carbon market analysis tool.[12]

See also

References

  1. ^ } emissions trading using marginal abatement curves, 1998."CO
    2
    "Ellerman, A.D. and Decaux, A., Analysis of post-Kyoto (PDF). Retrieved 2013-03-08.
     
  2. ^ "Vogt-Schilb, A. and Hallegatte, S., 2014. Marginal abatement cost curves and the optimal timing of mitigation measures. Energy Policy 66, 645–653". Dx.doi.org. Retrieved 2014-02-11. 
  3. ^ "Kesicki, F., Ekins, P., 2012. Marginal abatement cost curves: a call for caution. Climate Policy 12 (2), 219-236". Dx.doi.org. Retrieved 2013-03-08. 
  4. ^ Bloomberg New Energy Finance, US Marginal Abatement Cost Curve, 2010
  5. ^ McKinsey & Company, Reducing US greenhouse gas emissions: how much at what cost? 2007
  6. ^ } greenhouse gases in California, 2005"CO
    2
    "ICF International, Emission reduction opportunities for non- (PDF). Retrieved 2013-03-08.
     
  7. ^ Sweeney, J. and Weyant, J., Analysis of measures to meet the requirements of California’s Assembly Bill 32, 2008
  8. ^ Options and Potentials for Energy End-use Efficiency and Energy Services, Wuppertal Institute, 2006
  9. ^ } greenhouse gases, 2006"CO
    2
    "EPA, Global mitigation of non-. Epa.gov. 2010-11-17. Retrieved 2013-03-08.
     
  10. ^ "Enerdata, Production of MAC curves by sector and by country, 2010". Enerdata.net. Retrieved 2013-03-08. 
  11. ^ Impacts of Multi-gas Strategies for Greenhouse Gas Emissions Abatement: Insights from a Partial Equilibirum Model, Criqui P., Russ P., Deybe D., in The Energy Journal, Special Issue: Multi-Greenhouse Gas Mitigation and Climate Policy, 2007
  12. ^ "Enerdata, Use of MACCs for carbon markets analysis, 2010". Enerdata.net. Retrieved 2013-03-08. 
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