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Marginal abatement cost curves: a call for cautionFabian KesickiUN Climate Change Conference (SB 34) in Bonn, 7th June 2011
This presentation is based on the report ‘Marginal Abatement Cost Curves: a Call for Caution’ written by Ekins, P., Kesicki, F. and A. Smith
A research article of the same name is forthcoming in Climate Policy.
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Concept of Marginal Abatement Cost (MAC) Curves
Policy Use of MAC curves Shortcomings MAC Curves and REDD (Reducing Emissions
from Deforestation and Forest Degradation)
OVERVIEW
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MAC CURVE CONCEPT
Residential electronics
Cars full hybrid
Residential appliances
Insulation retrofit
Efficiency improvement
Geothermal
Nuclear Cars plug-in
Offshore windOnshore wind
Solar CSPSolar PV
BiomassCoal CCS
Gas CCSElectric heat pump
Electric boiler
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POLICY USE OF MAC CURVE Many areas:
Electricity saving Air pollution Waste reduction Water availability Energy-related emissions reduction REDD
Many countries: USA, EU, UK, France, Mexico, China REDD: Congo for example
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PROBLEMS WITH CURRENT MAC CURVES Unclear assumptions Cost definition Implementation barriers Discounting Intertemporal issues Interactions / baseline emissions Behavioural aspects Ancillary benefits/costs Handling uncertainty Financial focus
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ELECTRIC HYBRID CAR EXAMPLE
Parameter Unit Petrol ICE Petrol HybridDiscount rate % 5 5Lifetime years 12 12Investment cost € 19600 22400Operating cost €/a 1670 1732Annual kilometrage km/a 14481 14481Fuel consumption l/100 km 7 5.95Petrol price €/l 1.68 1.68Emission factor kg CO2/l 2.3 2.3
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0 500 1000 1500 2000 2500 3000 3500 4000
-400
-200
0
200
400
600
800
1000
Difference in investment cost
Investment cost [€]
Ab
ate
me
nt
co
st
[€ p
er
ton
CO
2]
0% 5% 10% 15% 20% 25% 30%0
500
1000
1500
2000
2500
3000
Increase in fuel efficiency
Difference in fuel efficiency between Hybrid and ICE [%]
Ab
ate
me
nt
co
st
[€ p
er
ton
CO
2]
5 7.5 10 12.5 15 17.5 200
200
400
600
800
1000
Vehicle life time
Vehicle life time [years]
Ab
ate
me
nt
co
st
[€ p
er
ton
CO
2]
0% 5% 10% 15% 20% 25%0
200
400
600
800
1000
1200
1400
1600
Discount rate
Discount rate [%]
Ab
ate
me
nt
co
st
[€ p
er
ton
CO
2]
MAC CURVES AND REDD
Kindermann et al. 2008
Kindermann et al. 2008
Nabuurs et al. 2007
Eliasch 2008
Grieg-Gran 2008
Blaser and Robledo 2007 Holdren 2007(Brazil only)
Stern 2007
Nauclér and Enkvist 2009
MAC CURVES AND REDD Uncertainty concerning baseline emissions Focus on opportunity cost without
considering administration, implementation, monitoring costs
Price discrimination Potential leakage Interactions with demand for bioenergy,
timber industry
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CONCLUSIONS MAC curves: simple and useful illustration
tool; first, rough guide to abatement costs and potentials at a specific point in time
Previously outlined caveats may have been overlooked in the past
MAC curves should be applied very carefully in the REDD debate
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