Marginal abatement costs of carbon dioxide emissions and its influencing factors: A global perspective

Abstract

Reducing CO2 emissions has become a major and urgent environmental goal worldwide. In this paper, we sample the data of 41 regions (including 165 countries) from 2000 to 2014 and adopt a gravity model to obtain an overview of the global flows of CO2 emissions, energy consumption, the global economy and capital stock since the beginning of the 21st century. We then investigate global technical efficiency, reduction potential, shadow prices and factors influencing the marginal abatement costs of CO2 emissions based on a quadratic directional output distance function. The empirical results show the following: (1) the global centres of gravity for CO2 emissions, energy consumption and capital stock have accelerated their shift to the Asian inland in the 21st century, but the global centre of gravity for the economy did not show the same trend. (2) Global technical inefficiency demonstrates a U-shape, with a turning point in 2007. Average annual total global CO2 emissions could be reduced by 4482.28 Mt, and the global marginal abatement costs of CO2 emissions are approximately 673.74–697.73 USD/t. (3) The relationship between economic development and marginal abatement costs is represented by a U-shaped curve. The world is currently in the climbing phase of this curve, implying that controlling CO2 emissions is becoming more costly. Moreover, energy structure, industrial structure, and CO2 emissions are negatively correlated with marginal abatement costs. Finally, the financial crisis has had a significant effect on marginal abatement costs.