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Marginal abatement cost

January 01, 1970

Abatement cost is the cost of reducing environmental negatives such as pollution. Marginal cost is an economic concept that measures the cost of an additional unit. The marginal abatement cost, in general, measures the cost of reducing one more unit of pollution. Marginal abatement costs are also called the "marginal cost" of reducing such environmental negatives.

Although marginal abatement costs can be negative, such as when the low carbon option is cheaper than the business-as-usual option, marginal abatement costs often rise steeply as more pollution is reduced. In other words, it becomes more expensive [technology or infrastructure changes] to reduce pollution past a certain point.

Marginal abatement costs are typically used on a marginal abatement cost curve, which shows the marginal cost of additional reductions in pollution.

Usage edit

Carbon traders use marginal abatement cost curves to derive the supply function for modelling carbon price fundamentals. Power companies may employ marginal abatement cost curves to guide their decisions about long-term capital investment strategies to select among a variety of efficiency and generation options. Economists have used marginal abatement cost curves to explain the economics of interregional carbon trading.[1] Policy-makers use marginal abatement cost 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, marginal abatement cost curves should not be used as abatement supply curves[why?] (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 edit

The way that marginal abatement cost curves are usually built has been criticized for lack of transparency and the poor treatment it makes of uncertainty, inter-temporal dynamics, interactions between sectors and ancillary benefits.[3] There is also concern regarding the biased ranking that occurs if some included options have negative costs.[4][5][6][7]

Examples of existing marginal abatement cost curves edit

Worldwide, marginal abatement cost studies show that improving the energy efficiency of buildings and replacing fossil fuelled power plants with renewables are usually the most cost effective ways of reducing carbon emissions.[8]

Various economists, research organizations, and consultancies have produced marginal abatement cost curves. Bloomberg New Energy Finance[9] and McKinsey & Company[10] have produced economy wide analyses on greenhouse gas emissions reductions for the United States. ICF International[11] produced a California specific curve following the Global Warming Solutions Act of 2006 legislation as have Sweeney and Weyant.[12]

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).[13]

The US Environmental Protection Agency has done work on a marginal abatement cost curve for non-carbon dioxide emissions such as methane, N2O, and hydrofluorocarbons.[14] Enerdata and Laboratoire d'Economie de la Production et de l'Intégration-Le Centre national de la recherche scientifique (France) produce marginal abatement cost curves with the Prospective Outlook on Long-term Energy Systems (POLES) model for the 6 Kyoto Protocol gases.[15] These curves have been used for various public and private actors either to assess carbon policies[16] or through the use of a carbon market analysis tool.[17]

The World Bank 2013 low-carbon energy development plan for Nigeria,[18] prepared jointly with the World Bank, utilizes marginal abatement cost curves created in Analytica.[19]

See also edit

References edit

  1. ^ "Ellerman, A.D. and Decaux, A., Analysis of post-Kyoto CO2 emissions trading using marginal abatement curves, 1998" (PDF). Retrieved 2013-03-08.
  2. ^ Vogt-Schilb, Adrien; Hallegatte, Stéphane (2014). "Vogt-Schilb, A. and Hallegatte, S., 2014. Marginal abatement cost curves and the optimal timing of mitigation measures" (PDF). Energy Policy. 66: 645–653. doi:10.1016/j.enpol.2013.11.045. hdl:10986/16379.
  3. ^ Kesicki, Fabian; Ekins, Paul (2012). "Marginal abatement cost curves: a call for caution". Climate Policy. 12 (2): 219–236. doi:10.1080/14693062.2011.582347. S2CID 154843220.
  4. ^ Levihn, Fabian (2016-11-01). "On the problem of optimizing through least cost per unit, when costs are negative: Implications for cost curves and the definition of economic efficiency". Energy. 114: 1155–1163. doi:10.1016/j.energy.2016.08.089.
  5. ^ Taylor, Simon (2012-09-01). "The ranking of negative-cost emissions reduction measures". Energy Policy. Special Section: Frontiers of Sustainability. 48: 430–438. CiteSeerX 10.1.1.1030.9697. doi:10.1016/j.enpol.2012.05.071.
  6. ^ Ward, D. J. (2014-10-01). "The failure of marginal abatement cost curves in optimising a transition to a low carbon energy supply". Energy Policy. 73: 820–822. doi:10.1016/j.enpol.2014.03.008.
  7. ^ Wallis, Max (1992). "Greenhouse ranking of gas-fuelling". Energy Policy. 20 (2): 174–176. doi:10.1016/0301-4215(92)90112-f.
  8. ^ "What is the cheapest way to cut carbon?". The Economist. 2021-02-22. ISSN 0013-0613. Retrieved 2021-03-21.
  9. ^ Bloomberg New Energy Finance, US Marginal Abatement Cost Curve, 2010[permanent dead link]
  10. ^ . Archived from the original on 2010-02-27. Retrieved 2010-02-09.
  11. ^ "ICF International, Emission reduction opportunities for non-CO2 greenhouse gases in California, 2005" (PDF). Retrieved 2013-03-08.
  12. ^ Sweeney, J. and Weyant, J., Analysis of measures to meet the requirements of California's Assembly Bill 32, 2008
  13. ^ Options and Potentials for Energy End-use Efficiency and Energy Services, Wuppertal Institute, 2006
  14. ^ "EPA, Global mitigation of non-CO2 greenhouse gases, 2006". Epa.gov. 2010-11-17. Retrieved 2013-03-08.
  15. ^ "Enerdata, Production of marginal abatement cost curves by sector and by country, 2015". Enerdata.net. 23 April 2015. Retrieved 2015-12-01.
  16. ^ Impacts of Multi-gas Strategies for Greenhouse Gas Emissions Abatement: Insights from a Partial Equilibrium Model, Criqui P., Russ P., Deybe D., in The Energy Journal, Special Issue: Multi-Greenhouse Gas Mitigation and Climate Policy, 2007
  17. ^ "Enerdata, Use of MACCs for carbon markets analysis, 2015". Enerdata.net. 24 June 2015. Retrieved 2015-12-01.
  18. ^ Low-Carbon Development: Opportunities for Nigeria, Editors: Raffaello Cervigni, John Allen Rogers, and Max Henrion, No 15812 in World Bank Publications, January 2013. 186p.
  19. ^ . Lumina Decision Systems. Archived from the original on 2015-04-04. Retrieved 2015-01-27.

January 01, 1970
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Abatement cost is the cost of reducing environmental negatives such as pollution Marginal cost is an economic concept that measures the cost of an additional unit The marginal abatement cost in general measures the cost of reducing one more unit of pollution Marginal abatement costs are also called the marginal cost of reducing such environmental negatives Although marginal abatement costs can be negative such as when the low carbon option is cheaper than the business as usual option marginal abatement costs often rise steeply as more pollution is reduced In other words it becomes more expensive technology or infrastructure changes to reduce pollution past a certain point Marginal abatement costs are typically used on a marginal abatement cost curve which shows the marginal cost of additional reductions in pollution Contents 1 Usage 2 Criticism 3 Examples of existing marginal abatement cost curves 4 See also 5 ReferencesUsage editCarbon traders use marginal abatement cost curves to derive the supply function for modelling carbon price fundamentals Power companies may employ marginal abatement cost curves to guide their decisions about long term capital investment strategies to select among a variety of efficiency and generation options Economists have used marginal abatement cost curves to explain the economics of interregional carbon trading 1 Policy makers use marginal abatement cost 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 marginal abatement cost curves should not be used as abatement supply curves why 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 editThe way that marginal abatement cost curves are usually built has been criticized for lack of transparency and the poor treatment it makes of uncertainty inter temporal dynamics interactions between sectors and ancillary benefits 3 There is also concern regarding the biased ranking that occurs if some included options have negative costs 4 5 6 7 Examples of existing marginal abatement cost curves editWorldwide marginal abatement cost studies show that improving the energy efficiency of buildings and replacing fossil fuelled power plants with renewables are usually the most cost effective ways of reducing carbon emissions 8 Various economists research organizations and consultancies have produced marginal abatement cost curves Bloomberg New Energy Finance 9 and McKinsey amp Company 10 have produced economy wide analyses on greenhouse gas emissions reductions for the United States ICF International 11 produced a California specific curve following the Global Warming Solutions Act of 2006 legislation as have Sweeney and Weyant 12 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 13 The US Environmental Protection Agency has done work on a marginal abatement cost curve for non carbon dioxide emissions such as methane N2O and hydrofluorocarbons 14 Enerdata and Laboratoire d Economie de la Production et de l Integration Le Centre national de la recherche scientifique France produce marginal abatement cost curves with the Prospective Outlook on Long term Energy Systems POLES model for the 6 Kyoto Protocol gases 15 These curves have been used for various public and private actors either to assess carbon policies 16 or through the use of a carbon market analysis tool 17 The World Bank 2013 low carbon energy development plan for Nigeria 18 prepared jointly with the World Bank utilizes marginal abatement cost curves created in Analytica 19 See also editEnvironmental economics Marginal cost Social costReferences edit Ellerman A D and Decaux A Analysis of post Kyoto CO2 emissions trading using marginal abatement curves 1998 PDF Retrieved 2013 03 08 Vogt Schilb Adrien Hallegatte Stephane 2014 Vogt Schilb A and Hallegatte S 2014 Marginal abatement cost curves and the optimal timing of mitigation measures PDF Energy Policy 66 645 653 doi 10 1016 j enpol 2013 11 045 hdl 10986 16379 Kesicki Fabian Ekins Paul 2012 Marginal abatement cost curves a call for caution Climate Policy 12 2 219 236 doi 10 1080 14693062 2011 582347 S2CID 154843220 Levihn Fabian 2016 11 01 On the problem of optimizing through least cost per unit when costs are negative Implications for cost curves and the definition of economic efficiency Energy 114 1155 1163 doi 10 1016 j energy 2016 08 089 Taylor Simon 2012 09 01 The ranking of negative cost emissions reduction measures Energy Policy Special Section Frontiers of Sustainability 48 430 438 CiteSeerX 10 1 1 1030 9697 doi 10 1016 j enpol 2012 05 071 Ward D J 2014 10 01 The failure of marginal abatement cost curves in optimising a transition to a low carbon energy supply Energy Policy 73 820 822 doi 10 1016 j enpol 2014 03 008 Wallis Max 1992 Greenhouse ranking of gas fuelling Energy Policy 20 2 174 176 doi 10 1016 0301 4215 92 90112 f What is the cheapest way to cut carbon The Economist 2021 02 22 ISSN 0013 0613 Retrieved 2021 03 21 Bloomberg New Energy Finance US Marginal Abatement Cost Curve 2010 permanent dead link McKinsey amp Company Reducing US greenhouse gas emissions how much at what cost 2007 Archived from the original on 2010 02 27 Retrieved 2010 02 09 ICF International Emission reduction opportunities for non CO2 greenhouse gases in California 2005 PDF Retrieved 2013 03 08 Sweeney J and Weyant J Analysis of measures to meet the requirements of California s Assembly Bill 32 2008 Options and Potentials for Energy End use Efficiency and Energy Services Wuppertal Institute 2006 EPA Global mitigation of non CO2 greenhouse gases 2006 Epa gov 2010 11 17 Retrieved 2013 03 08 Enerdata Production of marginal abatement cost curves by sector and by country 2015 Enerdata net 23 April 2015 Retrieved 2015 12 01 Impacts of Multi gas Strategies for Greenhouse Gas Emissions Abatement Insights from a Partial Equilibrium Model Criqui P Russ P Deybe D in The Energy Journal Special Issue Multi Greenhouse Gas Mitigation and Climate Policy 2007 Enerdata Use of MACCs for carbon markets analysis 2015 Enerdata net 24 June 2015 Retrieved 2015 12 01 Low Carbon Development Opportunities for Nigeria Editors Raffaello Cervigni John Allen Rogers and Max Henrion No 15812 in World Bank Publications January 2013 186p Marginal Abatement Lumina Decision Systems Archived from the original on 2015 04 04 Retrieved 2015 01 27 Retrieved from https en wikipedia org w index php title Marginal abatement cost amp oldid 1176405765, wikipedia, wiki, book, books, library,

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