Marginal Abatement Cost Research Articles

Marginal abatement cost curve of carbon emissions in China: a functional data analysis

Marginal abatement cost curve of carbon emissions in China: a functional data analysis

The Marginal Abatement Cost of Antimicrobials for Dairy Cow Mastitis: A Bioeconomic Optimization Perspective

Maintaining udder health is the primary indication for antimicrobial use (AMU) in dairy production, and modulating this application is a key factor in decreasing AMU. Defining the optimal AMU and the associated practical rules is challenging since AMU interacts with many parameters. To define the trade-offs between decreased AMU, labor and economic performance, the bioeconomic stochastic simulation model DairyHealthSim (DHS)© was applied to dairy cow mastitis management and coupled to a mean variance optimization model and marginal abatement cost curve (MACC) analysis. The scenarios included three antimicrobial (AM) treatment strategies at dry-off, five types of general barn hygiene practices, five milking practices focused on parlor hygiene levels and three milk withdrawal strategies. The first part of economic results showed similar economic performances for the blanked dry-off strategy and selective strategy but demonstrated the trade-off between AMU reduction and farmers' workload. The second part of the results demonstrated the optimal value of the animal level of exposure to AM (ALEA). The MACC analysis showed that reducing ALEA below 1.5 was associated with a EUR 10,000 loss per unit of ALEA on average for the farmer. The results call for more integrative farm decision processes and bioeconomic reasoning to prompt efficient public interventions.

Which strategy among avoid, shift, or improve is the best to reduce CO2 emissions from sand and gravel aggregate transportation?

Sand and gravel aggregate (SGA) transportation accounts for over 30% of the freight volume in China, which is greater than that of any other cargo; low-carbon development can effectively promote the decarbonization of freight transportation. This study presents a four-step evaluation method to assess CO2 emission reductions in freight transportation; the proposed method helps determine the relationship between the policy, CO2 emission reductions, demand, and mode market share. Using Beijing as a case study, this paper estimates the potential of reducing CO2 emissions from SGA transportation under various scenarios. The scenarios are set based on the avoid, shift, and improve strategies; the results of the Beijing case indicate that the CO2 emission for SGA transportation is 920.86 kt, which is approximately 1% of the total CO2 emissions in Beijing. The maximum reductions in CO2 emissions that can be achieved using the avoid, shift, and improve strategies are 0.92 kt (0.1% of total), 560.52 kt (60.9% of total), and 78.59 kt (8.5% of total), respectively. The shift strategy is confirmed to be the most realistic and cost-effective approach for reducing CO2 emissions from SGA transportation. In addition, the implementation of subsidy policies is discussed. Marginal abatement costs under the subsidy scenarios are higher than 224 CNY/t, which is higher than the price in the Chinese carbon trading market.

Analyzing multi-greenhouse gas mitigation of China using a general equilibrium model

Climate actions have focused on CO2 mitigation and only some studies of China consider non-CO2 greenhouse gases (GHGs), which account for nearly 18% of gross GHG emissions. The economy-wide impact of mitigation covering CO2 and non-CO2 GHGs in China, has not been comprehensively studied and we develop a multi-sector dynamic model to compare the impact of CO2-only mitigation with a multi-GHG mitigation policy that also price non-CO2 GHGs. We find that the multi-GHG approach significantly reduces the marginal abatement cost and economic loss to reach the same level of GHG emissions (measures as 100 year global warming potential) compared to a CO2-only scenario. By 2060, multi-gas mitigation can reduce the tax rate by 15.44% and improve real gross domestic product (GDP) by 0.41%. The aggregate gain brought by multi-GHG mitigation are robust to various pathways and but vary across periods and sectors.

Does foreign direct investment promote environmental performance: An investigation on shadow prices of pollutants

The shadow prices, or marginal abatement cost, of pollutants is a useful measure of environmental performance. Unlike much of the previous studies focusing on only one kind of pollutants, this paper applies the (multiplier) by-production approach to measure the shadow prices of carbon emission, sulfur emission, and dust. The case of regional economies in China is considered. As the foreign direct investment may have an impact on the environmental performance, a spatial Durbin model is utilized to identify the impact of foreign direct investment on the shadow prices of pollutants. The results show that the shadow prices of all three pollutants have been increasing over time which indicates the environmental performance of China has been improving. Moreover, the spatial regression results imply that both foreign direct investment and technology export volume positively impact the shadow price of pollutant emissions across the provinces of China.

Implementing a highly adaptable method for the multi-objective optimisation of energy systems

In order to mitigate climate change, the energy sector undergoes a transformation towards a climate-neutral future based on renewable energy sources. Energy system models generate insights and support decision making for this transformation. In the face of, e.g., growingly complex and important environmental assessments and stakeholder structures, considering multiple objectives in these models becomes essential to realistically reflect existing interests. However, there is a lack of highly adaptable energy system models incorporating multiple objectives. We present an implementation of the augmented epsilon-constraint method with the highly adaptable energy system optimisation framework Backbone. It enables the simultaneous optimisation of multiple objectives, such as the minimisation of costs, CO2 emissions or self-sufficiency for a broad range of energy systems including different sectors and scales. For this purpose, new objective functions and constraints are implemented in Backbone. They are used by an external algorithm in a sequence of parallelised optimisations to cope with the complexity of real-world applications. The method is adaptable to further objectives and scalable to large and complex systems. Applications to the Western and Southern European power sector in 2050 and a sector-coupled mixed-integer household-level model demonstrate its benefits and adaptability. Pareto fronts, technology use and trade-offs are analysed and quantified. In the European power sector, emission reductions of up to 90% can be achieved at marginal CO2 abatement costs of below 100 EUR/(tCO2). For the household, energy imports from the public grids can be reduced by 70% at 20% higher cost and average cost of self-sufficiency of 2.6ct/kWh. We expect that the presented methods and models reveal new valuable insights to modellers and decision makers.

Marginal abatement costs for GHG emissions in Canada: a shadow cost approach

This study approximates the marginal abatement costs (MACs) of reducing GHG emissions in Canada using the shadow cost approach. Utilizing industry level data, we are the first to offer Canadian estimates based on a Hyperbolic Output Distance Function (HODF) and the stochastic frontier estimation. Accounting for GHG emissions caused by energy consumption, we obtain an average shadow MAC of $130/t across 30 industries. In the GHG-intensive industries such as the electric utilities and non-conventional oil extraction, MACs are lower than the CO2 levy of $50/t imposed by the federal government. Since these low-MACs sectors account for about 98 per cent of total GHG emissions and 94 per cent of total energy use in industries studied, the envisaged $50/t carbon levy could notionally result in a significant GHG abatement in Canada.Graphical abstractFig. aEstimated Marginal Abatement Costs by Sector

Optimizing the rolling out plan of China’s carbon market

Although China has developed the world's largest carbon emissions trading scheme (ETS), there is no official documentation explaining how the current sectoral coverage plan was determined and what sectoral rollout plan is preferred. Here, we contribute to the policy development of the world's largest carbon market by suggesting a priority list of industries be covered in the ETS. We estimated marginal abatement cost curves using a database of more than two million firms covering over 500 four-digit industries that account for more than 97% of total industrial emissions, and simulating various carbon market scenarios including thermal power, 13 designated, and an additional 50 industries that have high emissions or are covered in other ETSs. Our analysis suggests that the cement industry should be the next sector to be included in China's ETS. In our revised list, the average abatement cost can be reduced by 39.5-78.3% compared with the business-as-usual scenario.

A marginal abatement cost curve for climate change mitigation by additional carbon storage in French agricultural land

Following the Paris agreement in 2015, the European Union (EU) set a carbon neutrality objective by 2050, and so did France. The French agricultural sector can contribute as a carbon sink through carbon storage in biomass and soil, in addition to reducing GHG emissions. The objective of this study is to quantitatively assess the additional storage potential and cost of a set of eight carbon-storing practices. The impacts of these agricultural practices on soil organic carbon storage and crop production are assessed at a very fine spatial scale, using crop and grassland models. The associated area base, GHG budget, and implementation costs are assessed and aggregated at the region level. The economic model BANCO uses this information to derive the marginal abatement cost curve for France and identify the combination of carbon storing practices that minimizes the total cost of achieving a given national net GHG mitigation target. We find that a substantial amount of carbon, 36.2 to 52.9 MtCO2e yr−1, can be stored in soil and biomass for reasonable carbon prices of 55 and 250 € tCO2e−1, respectively (corresponding to current and 2030 French carbon value for climate action), mainly by developing agroforestry and hedges, generalising cover crops, and introducing or extending temporary grasslands in crop sequences. This finding questions the 3–5 times lower target of 10 MtCO2e.yr−1 retained for the agricultural carbon sink by the French climate neutrality strategy. Overall, this would decrease total French GHG emissions by 9.2–13.8%, respectively (reference year 2019).

Cost-Potential Curves of Onshore Wind Energy: the Role of Disamenity Costs

Numerical optimization models are used to develop scenarios of the future energy system. Usually, they optimize the energy mix subject to engineering costs such as equipment and fuel. For onshore wind energy, some of these models use cost-potential curves that indicate how much electricity can be generated at what cost. These curves are upward sloping mainly because windy sites are occupied first and further expanding wind energy means deploying less favorable resources. Meanwhile, real-world wind energy expansion is curbed by local resistance, regulatory constraints, and legal challenges. This presumably reflects the perceived adverse effect that onshore wind energy has on the local human population, as well as other negative external effects. These disamenity costs are at the core of this paper. We provide a comprehensive and consistent set of cost-potential curves of wind energy for all European countries that include disamenity costs, and which can be used in energy system modeling. We combine existing valuation of disamenity costs from the literature that describe the costs as a function of the distance between turbine and households with gridded population data, granular geospatial data of wind speeds, and additional land-use constraints to calculate such curves. We find that disamenity costs are not a game changer: for most countries and assumptions, the marginal levelized cost of onshore wind energy increase by 0.2–12.5 €/MWh.

Life cycle carbon emission and cost-effectiveness analysis of electric vehicles in China

Electric vehicles play an important role in energy transition and low-carbon development. It is important to evaluate the energy-saving emission reduction and cost-effectiveness of electric vehicles. In this paper, the life cycle carbon emission model and the life cycle cost model are established. Combined with the emission inventory and the calculated life cycle cost, the marginal emission reduction cost model is finally established. The results show that: 1) Electric vehicles have reduced 47 % of life-cycle carbon emissions, which is mainly reflected in the extremely small emissions during the utilization phase, and with little difference in other phases; 2) Although electric vehicles have lower emission costs and vehicle use costs, they still cannot compensate the gap in initial purchase costs. Electric vehicles do not have economic advantages over gasoline vehicles; 3) Under the existing technical conditions, electric vehicles have higher marginal abatement costs. The abatement costs are affected by many factors and have a large potential for decline; 4) When the gasoline price exceeds 9.8 CNY/L (1.372 USD/L), the abatement costs of electric vehicles are negative. In this condition, the development of electric vehicles is most effective in promoting energy saving and emission reduction.

A fairly and effectively analysis for the sharing of CO2 emissions reduction responsibility in China's provincial building sectors

China's goal to peak CO2 emissions by 2030—in accordance with the Paris agreement—is being jeopardized by the increasing carbon emissions from the building sector. Allocating CO2 emission reduction (CER) responsibilities for the building sector to the provinces fairly and efficiently remains challenging. In this study, we first quantify the government leading targets regarding CER responsibilities, while clarifying the extent to which China considers the principles of equity and efficiency while allocating provincial CER responsibilities. Subsequently, based on the carbon emission efficiency, CER potential, and abatement cost of China's building sector, we establish a more equitable and effective model for sharing the CER responsibilities in the building sector at the provincial level. Using data from the building sector in 30 provinces in China between 2005 and 2019, we define and compare the CER responsibilities that the building sector in each province should bear with the CER responsibility-sharing scheme under multiple perspectives. Results show that the Chinese government has not fully considered the principles of equity and efficiency in setting the CER targets for each province in the past 15 years. Our model for sharing the CER responsibility in the local building sector appears more reasonable and adequate: The marginal abatement cost (i.e., economic loss of abatement) is about 7% less than those of other schemes; additionally, it guarantees the fairness of development power. Overall, this study furthers the CER responsibility-sharing theory and constitutes a reference for implementing more effective energy saving and CER policies.

Improving the regional deployment of carbon mitigation efforts by incorporating air-quality co-benefits: A multi-provincial analysis of China

It is critically important to include the co-benefits of abated air pollution when sharing carbon mitigation efforts among provinces. Therefore, using a Chinese multi-regional computable general equilibrium model, this study incorporated the pollutant co-benefits into the carbon marginal abatement cost curves and evaluated the inter-provincial abatement effort sharing for China's provinces to achieve the Nationally Determined Contribution target. Results show that the more developed eastern economies face higher abatement costs under the same abatement level compared to the less developed central and western provinces. Second, in the composition of total co-benefits among provinces, the co-benefits of SO2 reductions exceed 60% followed by the co-benefits of NOX and PM2.5 reductions. Finally, the provincial abatement costs will be offset by 4.3% to 18.9% after considering the co-benefits. Specifically, provinces with high per capita GDP and energy-intensive industries (e.g. Shandong, Liaoning, and Jilin) and some provinces with energy production bases (e.g. Inner Mongolia, Shanxi, and Xinjiang) have higher co-benefits and offset the more abatement costs; therefore, they can consider raising abatement efforts. Moreover, provinces with high economic levels but fewer co-benefits (e.g. Beijing, Tianjin, and Shanghai) can consider providing climate funding or transferring abatement technologies to support the abatement work of less developed provinces.

Optimal carbon taxation in EU frontrunner countries: coordinating with the EU ETS and addressing leakage

ABSTRACT Several EU countries have targets for the reduction of CO2e emissions that go beyond the target set by the EU. We study what would be the optimal carbon tax policy in such EU frontrunner countries, focusing on two questions: 1) How should national climate policy be coordinated with the European Emissions Trading System (ETS), and 2) How should an EU frontrunner country address the risk of carbon leakage? We show that these issues are closely linked and that the answers to the two questions depend on the following factors: i) The shadow cost assigned to carbon leakage, ii) The rates of carbon leakage in the ETS and non-ETS sectors, and iii) The price of ETS emission allowances relative to the domestic marginal abatement cost of attaining the desired reduction of domestic emissions. Our analysis shows that it is preferable for an EU frontrunner country to implement a national ETS sector carbon tax that results in a higher total carbon price in the national ETS sector compared to the national non-ETS sector. We illustrate how our theoretical model can be combined with a modified version of the GTAP-E general equilibrium model of the world economy to estimate the parameters of the optimal national carbon tax scheme in an EU frontrunner country, using Denmark as an example. We find that the ETS sector should pay a total carbon price that is between 33 and 78 percent above that of the rest of the economy depending on the aversion to carbon leakage. Key policy insights It is generally optimal for an EU frontrunner country – one with a domestic emission target beyond that set by the EU – to implement a national ETS sector tax. The total national carbon price should be higher in the ETS sector compared to the non-ETS sector. Data for Denmark indicate that the total national ETS sector carbon price should be at least 33 percent higher than that of the national non-ETS sector.

Greenhouse gas reduction potential and cost-effectiveness of economy-wide hydrogen-natural gas blending for energy end uses

North American and European jurisdictions are considering repurposing natural gas infrastructure to deliver a lower carbon blend of natural gas and hydrogen; this paper evaluates the greenhouse gas reduction potential and cost-effectiveness of the repurposing. The analysis uses a bottom-up economy-wide energy-systems model of an emission-intensive jurisdiction, Alberta, Canada, to evaluate 576 long-term scenarios from 2026 to 2050. Many scenarios were included to give the analysis broad international applicability and differ by sector, hydrogen blending intensity, carbon policy, and hydrogen infrastructure development. Twelve hydrogen production technologies are compared in a long-term greenhouse gas and cost analysis, including advanced technologies. Autothermal reforming with carbon capture provides both lower-carbon and lower-cost hydrogen compared to most other technologies in most futures, even with high fugitive natural gas production emissions. Using hydrogen-natural gas blends for end-use energy applications eliminates 1–2% of economy-wide GHG emissions and marginal GHG abatement costs become negative at carbon prices over $300/tonne. The findings are useful for stakeholders expanding the international low-carbon hydrogen economy and governments engaged in formulating decarbonization policies and are considering hydrogen as an option.

Does Retrofitting Pay Off? An Analysis of German Multifamily Building Data

Several studies have investigated the relationship between the energy performance of buildings and housing prices. First, this paper identifies a price premium for energy efficiency within the German rental market. Then, the indexed price differences and associated marginal benefits are compared with the marginal costs of energy retrofits. An extensive database of Germany’s largest online platform for housing over a time span from 2016 to 2020 is used in a hedonic regression approach. In addition, to extract the marginal costs of energy consumption abatement, a dataset of 1048 rental units regarding green-retrofit measures is utilized. Although a significant green premium is identified in the rental market, the findings suggest that it is not high enough to compensate landlords for the money they have to spend to retrofit. The marginal costs exceed the marginal benefits by far. Furthermore, it is found that the German government’s recent plans to split the carbon tax between landlords and tenants do not change this because the price per metric ton of carbon is insufficiently high. Limitations with respect to the data basis and consequently to the interpretation of the results exist. Nevertheless, the findings can help both tenants and landlords in their decision-making, as well as policy makers in the implementation of decarbonization efforts.

Lurking in the shadows: The impact of CO2 emissions target setting on carbon pricing in the Kyoto agreement period.

This paper is a case study of the impact of CO2 emissions target setting. We empirically investigate the targets set during the Kyoto Protocol period using a convex nonparametric least squares system, quantile regressions, and a comprehensive data set of 125 countries. Our findings reveal CO2 marginal abatement costs, which: (1) are significantly higher for target setting countries; (2) increase over the sample period; (3) and are an order of magnitude greater than the prevailing emissions pricing mechanisms. The results provide insights into the consequences of policies to curb unwanted by-products in a regulated system and shed light on the price efficiency of carbon markets. Furthermore, we contribute to the debate on emission reduction standard-setting and highlight the importance of shadow price estimates when regulating market instabilities in an emission trading scheme.

How can China achieve its goal of peaking carbon emissions at minimal cost? A research perspective from shadow price and optimal allocation of carbon emissions

The Chinese government has declared a determination at the 75th United Nations General Assembly that China will improve its independent contribution and adopt more powerful measures to peak the carbon emissions before 2030. However, such strict implementation of carbon reduction policies is bound to bring the cost of sacrificing economic development. In such a context, this paper tries to use shadow price to measure the average social cost of emission reduction, marginal abatement cost to depict the pressure to reduce carbon emissions based on non-radial distance function, and provides an optimal scheme for provincial emission reduction to minimize the national cost of emission reduction based on variable-coefficient model. Results show that: First, the average value of shadow price is 15.91 and varies widely among regions, which means on average reducing one unit of carbon emissions will sacrifice 15.914 yuan RMB of economic output, and there exists possibility of carbon transactions across regions; Second, on the one hand, marginal abatement cost of carbon emission for most regions presents an upward tendency over time, which means greater economic costs have to be sacrificed with economic development in the future; On the other hand, marginal abatement cost is much higher in regions with high economic level than that in the economically undeveloped areas, which indicates reducing carbon emissions is becoming increasingly difficult and would pay more economical cost in economically developed regions; Third, the optional allocation scheme of CO2 reduction derived from this research is better than administrative ways of Grandfathering and Benchmarking in terms of minimizing emission reduction cost. Results of this paper indicate that larger carbon trading market can be implemented in China to economically fulfill the commitment of peaking carbon emissions.

Economic and environmental analysis to evaluate the potential value of co-optima diesel bioblendstocks to petroleum refiners

The U.S. petroleum refining sector is undergoing a period of historic transformation, catalyzed by the decarbonization of the U.S. economy. Diesel-boiling-range bioblendstocks have gained traction, owing to their superior fuel properties and environmental performance as compared to traditional petroleum fuels. This work couples refinery linear programming models with life cycle assessment to quantify the potential economic and environmental benefits, and trade-offs, of blending diesel-boiling-range bioblendstocks at petroleum refineries. Linear programming models were developed in Aspen Process Industry Modeling Systems (PIMS) for three representative petroleum refinery configurations of differing complexity. Seven diesel-boiling-range bioblendstocks: 4-butoxyheptane, 5-ethyl-4-propylnonane, soy biodiesel, sludge hydrothermal liquefaction diesel, polyoxymethylene ethers, renewable diesel, and hexyl hexanoate, were investigated to identify key fuel properties that influence refineries’ economics and to track the effect of adding bioblendstocks on refinery-wide cradle-to-gate greenhouse gases (GHG) emissions. These analyses considered blending levels from 10 to 30 vol% and fuel demand projections over the period 2040 to 2050. This analysis determines that bioblendstock sulfur content and cetane number are the primary fuel attributes with the potential to provide value to refiners. Life cycle assessment results indicate that the use of diesel-boiling-range bioblendstocks can reduce cradle-to-gate refinery GHG emissions by up to ∼ 40 % relative to conventional refinery operations when considering carbon uptake in the supply chain of the bioblendstock. Refinery-wide marginal GHG abatement costs range from 120 to 3,600 USD2016/metric tons carbon dioxide equivalent avoided across the scenarios evaluated. Reducing the price of bioblendstocks is identified as a key to their adoption.

How has China's low-carbon city pilot policy influenced its CO2 abatement costs? Analysis from the perspective of the shadow price

Extant studies mainly focus on the emissions reduction effect of environmental regulations, ignoring their influences on the costs of reducing emissions. This study takes the low-carbon city (LCC) pilot project in China as a quasi-natural experiment and examines its impact on the marginal abatement cost (MAC) of CO2 emissions. Based on city-level data from 2003 to 2018, it first utilizes a dual model of non-linear programming to estimate the shadow price of CO2 emissions, which is applied to measure the MAC. Then, it employs the difference-in-differences (DID) approach to estimate the causal impact. The results suggest that the LCC project has increased the MAC of CO2 emissions of pilot cities by 5.27% through two opposite effects: (i) The green technology progress effect, which decreases the MAC; (ii) The emissions intensity effect, which increases the MAC. The results are robust after accounting for heterogeneous treatment effects, omitted variables, sample selection bias, potential outliers, and confounding factors. Besides, the heterogeneity analysis suggests that the LCC project has a greater impact on small and medium-sized cities and non-resource-based cities. The findings of this study provide a more thorough knowledge of the policy effects of the LCC project and demonstrate the importance of green technology progress in reducing CO2 emissions.