When Starting with the Most Expensive Option Makes Sense : Use and Misuse of Marginal Abatement Cost Curves
This article investigates the use of expert-based Marginal Abatement Cost Curves (MACC) to design abatement strategies. It shows that introducing inertia, in the form of the "cost in time" of available options, changes significantly the m...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110921094422 http://hdl.handle.net/10986/3567 |
| Summary: | This article investigates the use of
expert-based Marginal Abatement Cost Curves (MACC) to design
abatement strategies. It shows that introducing inertia, in
the form of the "cost in time" of available
options, changes significantly the message from MACCs. With
an abatement objective in cumulative emissions (e.g.,
emitting less than 200 GtCO2 in the 2000-2050 period), it
makes sense to implement some of the more expensive options
before the potential of the cheapest ones has been
exhausted. With abatement targets expressed in terms of
emissions at one point in time (e.g., reducing emissions by
20 percent in 2020), it can even be preferable to start with
the implementation of the most expensive options if their
potential is high and their inertia significant. Also, the
best strategy to reach a short-term target is different
depending on whether this target is the ultimate objective
or there is a longer-term target. The best way to achieve
Europe's goal of 20 percent reduction in emissions by
2020 is different if this objective is the ultimate
objective or if it is only a milestone in a trajectory
toward a 75 percent reduction in 2050. The cheapest options
may be sufficient to reach the 2020 target but could create
a carbon-intensive lock-in and preclude deeper emission
reductions by 2050. These results show that in a world
without perfect foresight and perfect credibility of the
long-term carbon-price signal, a unique carbon price in all
sectors is not the most efficient approach. Sectoral
objectives, such as Europe's 20 percent renewable
energy target in Europe, fuel-economy standards in the auto
industry, or changes in urban planning, building norms and
infrastructure design are a critical part of an efficient
mitigation policy. |
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