Marginal Abatement Cost Research Articles

Assessment of renewable energy transition pathways for a fossil fuel-dependent electricity-producing jurisdiction

This research assesses the transition of a fossil fuel-based electricity production jurisdiction to a renewable-based electricity jurisdiction through an extensive scenario analysis. This fills a knowledge gap where a wide-range of fossil-to-renewable electricity generation pathways is compared within a single analysis framework. To conduct this study, a novel data-intensive electricity system model was developed with the Long-range Energy Alternatives Planning system and applied to evaluate alternative electricity generation mix scenarios to the year 2050. A case study for Alberta, a fossil fuels-based province in Canada, was conducted. A total of 382 scenarios were analyzed considering different renewable pathways and varying key uncertain future conditions. The greenhouse gas emission abatement and marginal greenhouse gas abatement costs of each scenario were evaluated and compared. Several renewable-based scenarios resulted in significant greenhouse gas abatement at lower costs than the fossil-fuel based business-as-usual scenario. The maximum greenhouse gas abatement possible at a net cost reduction compared to the business-as-usual scenario was found through a specific combination of wind, hydro, and solar power which resulted in over a 90% reduction from 2005 emission levels at −$1.8/t of carbon dioxide equivalent abated. The results of this study provide policy insight for jurisdictions transitioning away from fossil fuel-based electricity to renewables.

De-risking Renewable Energy Investments in Developing Countries: A Multilateral Guarantee Mechanism

Summary Mitigation of global warming requires substantial investment in electricity generation from renewable sources. A large share of new generation capacity is required in regions with adverse financing conditions. We propose a global guarantee mechanism to reduce risk premia of renewable energy investments by means of risk pooling and increased market efficiency. Policymakers could establish this mechanism by scaling up existing international risk guarantee initiatives. We estimate the net present value of overall savings at US$2018 1.5 trillion globally for investments by 2030, with the largest relative savings (between 20.5% and 22%) in Sub-Saharan Africa and the Maghreb. The savings from such a mechanism outweigh its estimated average yearly operating cost. By lowering the cost of decarbonization in high-risk countries, the proposed mechanism offers policymakers a tool to make current global mitigation pledges more achievable and enables the global community to pursue more ambitious climate action.

The marginal abatement cost curve and optimized abatement trajectory of CO2 emissions from China’s petroleum industry

Assessing the marginal abatement costs (MACs) of emissions improves the understanding of the extent of current CO2 mitigation and provides regions and industries with information on how to mitigate emissions cost-effectively. This study proposes a hybrid method to evaluate the MAC. It combines the strengths of bottom-up engineering methods and top-down economy-wide methods. A parametric directional distance function is employed to estimate the MAC from an economic perspective, and the abatement level is further incorporated to generate increasing curves, similar to the outcomes derived from an engineering perspective. In addition, this method takes into consideration whether the abatement level exceeds the abatement potential with current production technologies so as to provide a more realistic estimation of the MAC curves. The proposed technique is applied in estimating the carbon emission MAC in China’s petroleum industry. The estimation results indicate that (i) the MAC of China’s petroleum industry would change from 9821 to 16,307 yuan/ton when the abatement level increases from 1 to 50%; (ii) this industry would spend 36.5 to 42.5 billion Chinese yuan annually to achieve China’s CO2 reduction target proposed in its Intended Nationally Determined Contributions (NDCs); (iii) assigning the CO2 reduction targets based on the estimated MAC curves instead of the traditional grandfathering abatement target assignment would help to save China’s petroleum industry an additional 29.97 to 33.65% in abatement costs when achieving the NDCs. The MAC curves estimated in this study indicate more accurate relationships between abatement levels and abatement costs, and hence provide decision-makers in industries and governments with a more reliable instrument to determine the prices of emissions permits, total abatement costs, and implementation strategies in an emissions trading scheme.

System analysis of the bio‐based economy in Colombia: A bottom‐up energy system model and scenario analysis

AbstractThe transition to a sustainable bio‐based economy is perceived as a valid path towards low‐carbon development for emerging economies that have rich biomass resources. In the case of Colombia, the role of biomass has been tackled through qualitative roadmaps and regional climate policy assessments. However, neither of these approaches has addressed the complexity of the bio‐based economy systematically in the wider context of emission mitigation and energy and chemicals supply. In response to this limitation, we extended a bottom‐up energy system optimization model by adding a comprehensive database of novel bio‐based value chains. We included advanced road and aviation biofuels, (bio)chemicals, bioenergy with carbon capture and storage (BECCS), and integrated biorefinery configurations. A scenario analysis was conducted for the period 2015–2050, which reflected uncertainties in the capacity for technological learning, climate policy ambitions, and land availability for energy crops. Our results indicate that biomass can play an important, even if variable, role in supplying 315–760 PJ/y of modern bio‐based products. In pursuit of a deep decarbonization trajectory, the large‐scale mobilization of biomass resources can reduce the cost of the energy system by up to 11 billion $/year, the marginal abatement cost by 62%, and the potential reliance on imports of oil and chemicals in the future. The mitigation potential of BECCS can reach 24–29% of the cumulative avoided emissions between 2015 and 2050. The proposed system analysis framework can provide detailed quantitative information on the role of biomass in low carbon development of emerging economies. © 2020 The Authors. Biofuels, Bioproducts, and Biorefining published by Society of Chemical Industry and John Wiley & Sons, Ltd

Low-Carbon Urban Water Systems: Opportunities beyond Water and Wastewater Utilities?

The provision of urban water and wastewater services contributes to greenhouse gas (GHG) emissions. Urban water supply and wastewater utilities can potentially achieve low-carbon or carbon-neutral operation through many “utility opportunities”. Outside the jurisdiction of water utilities, many water-related “wider opportunities” can also contribute to GHG emissions abatement for cities. This study aims to explore the GHG emissions abatement potential, cost effectiveness, and enabling factors of implementing wider opportunities in cities. Using Amsterdam as a case study, we developed a marginal abatement cost curve to compare the abatement potential and cost effectiveness of both utility and wider opportunities. The results show that many wider opportunities related to thermal energy, water end use, and life cycle are cost-effective with significant abatement potential, compared to utility opportunities. This case study and emerging worldwide examples show that the water industry has a role to play to support wider water-related opportunities in cities. This vision can be supported by developing mechanisms to credit utilities for wider opportunity initiatives, building inter- and intrasectoral partnerships for utilities, accounting for scope 3 emissions of utilities, and being open to extend utilities’ role beyond water and wastewater services providers.

Reduction of nitrogen pollution in agriculture through nitrogen surplus quotas: an analysis of individual marginal abatement cost and different quota allocation schemes using an agent-based model

Nitrogen (N) pollution has mostly been controlled using command-and-control instruments. However, nitrogen surplus permits (NSPs), which are tradeable, can be more cost-efficient in addressing the problem. To model this instrument, we calculated the individual marginal abatement cost curve for a sample of about 3,400 Swiss farms using farm-optimization models implemented in the agent-based agricultural sector model SWISSland. We also used SWISSland to analyze the effects of two NSP distribution systems (grandfathering and land-based allocation) on different farm types. The results showed that different farm types range in their abatement costs to reduce N surplus from an average of −0.04 CHF kg−1 N on arable farms to 51.06 CHF kg−1 N on special crop farms. We also found that N surpluses hardly explain the level of abatement costs. The biggest differences in effects of the distribution scheme were found in intensive livestock farm types such as pig or poultry farms.

Crop production, water pollution, or climate change mitigation—Which drives socially optimal fertilization management most?

We introduce a multistep modeling approach for studying optimal management of fertilizer inputs in a situation where soil nitrogen and carbon dynamics and water and atmosphere externalities are considered. The three steps in the modeling process are: (1) generation of the data sets with a detailed simulation model; (2) estimation of the system models from the data; (3) application of the obtained dynamic economic optimization model considering inorganic and organic fertilizer inputs. We demonstrate the approach with a case study: barley production in southern Finland on coarse and clay soils. Our results show that there is a synergy between climate change mitigation and water protection goals, and a trade-off between pollution mitigation and crop production goals. If a field is a significant source of greenhouse gas (GHG) emissions and an insignificant source of water pollution, atmospheric externalities dominate the water externalities, even for a relatively low social cost of carbon (SCC). If a field is a significant source of water pollution, the SCC would have to be very high before atmospheric externalities dominate water externalities. In addition, an integrated nutrient management system appears better than a system in which only inorganic or organic fertilizer is used, although manure is not a solution to agriculture's GHG emissions problem. Moreover, GHG emissions and nitrogen and carbon leaching mitigation efforts should first be targeted at coarse soils rather than clay soils, because the marginal abatement costs are considerably lower for coarse soils.

Emission Reduction Opportunities in a Rapidly Growing Economy

Vietnam’s Green Growth Action Plan for the period 2014–2020 sets out an overall plan for the sustainable development of the country. One of the cornerstones of that plan is the development of a greenhouse gas inventory and emission reduction opportunity assessment for Ho Chi Minh City. This provides a basis for the roadmap towards green growth in Ho Chi Minh City, one of Vietnam’s largest cities. Marginal costs of 38 emission reduction measures were determined for two main economy sectors, namely energy (32 measures) and agriculture, forestry, and other land use (6 measures). From that analysis, a marginal abatement cost curve was compiled for the energy sector. The total emission reduction opportunities available in 2020 are estimated to be 8.97 million tCO2e, which represents a 14.7% reduction compared to business as usual. Even when the city only implements reduction measures with negative marginal costs (i.e., abatement that saves money), significant reductions of 5.25 MtCO2e (8.6% reduction compared to business as usual) would be achieved. There are significant similarities in abatement opportunities between Ho Chi Minh City and Hanoi, Vietnam’s capital. The case study shows significant reduction in greenhouse gas emissions can be achieved in fast-growing cities with an appropriate level of investment and government support.

Dynamics of pollutants’ shadow price and its driving forces: An analysis on China’s two major pollutants at provincial level

The rapid change in environmental protection in China raises our interests in evaluating the shadow price of sulfur dioxide (SO2) and chemical oxygen demand (COD), and in developing a framework for analyzing the association between pollutants’ shadow prices and their driving forces: technological change, scale efficiency change, and pure efficiency change. The imbalance across the provinces also draws our attention to a provincial-level analysis. The results show that the national average shadow prices of SO2 and COD showed a substantial upward trend during 2001 and 2015, with the mean value being $2582.67/ton and $1639.79/ton, respectively. In most eastern provinces, the shadow prices of both pollutants were relatively higher than those in the central and western regions. For the eastern region, technological change, scale efficiency change, and pure efficiency change that brought about by a variety of measures impacted the social marginal abatement cost of SO2 significantly. For the western region, these three factors significantly impacted the marginal abatement cost of COD. For the central region, a change in scale efficiency brought about by the adjustment of production scale and/or industrial structure significantly impacted the marginal abatement cost of SO2, and the other two factors significantly impacted the marginal abatement cost of COD. The results suggest the importance of establishing a regionally differentiated policy framework, emphasizing on the measures that previously have not impacted the social marginal abatement cost, and setting up better coordination of synergies between multiple pollutants.

Cost-effectiveness of mussel farming as a water quality improvement measure: Agricultural, environmental and market drivers

Abstract This study aims to understand the economic and bio-physical conditions under which mussel farming is a cost-effective mitigation measure to improve water quality related to excess nitrogen in fjords and coastal areas. We set-up a mixed-integer optimization model including every farm in three agricultural catchments surrounding Limfjorden, the largest fjord in Denmark. We include a number of relevant nitrogen abatement measures, including agricultural land-use measures and mussel farming in the sea. The aim is to model the least costly combination of mitigation measures to improve water quality when agricultural, environmental and market conditions vary. We run three scenarios varying environmental conditions for mussel productivity and market opportunities for mussel-based products as organic animal feed. We analyze the resulting marginal abatement costs and draw insights about the potential scale of mussel farming for the different catchments. We show that mussel farming is a cost-effective option for 2 of the 3 catchments, but that decreasing mussel productivity over time may make the measure ineffective for one of the catchments, if a market for feed is not available. The possibility of a market for mussel-based organic feed significantly increases the share of nitrogen reduction done by mussels and decreases overall costs by up to 65%. Ultimately, the results indicate that, for catchments where environmental conditions are adequate, mussel farming can be a cost-effective nutrient reduction measure. Therefore, mussel farming can potentially increase the cost-effectiveness of incentive schemes aimed at reducing eutrophication in fjords and coastal waters.

Technical inefficiency, abatement cost and substitutability of industrial water pollutants in Jiangsu Province, China

Environmental pollution, caused by industrial wastewater discharge, restricts the transformation of China’s industrial economy. In terms of its gross industrial product, Jiangsu Province has always been among the top-ranking areas of China. To ensure the green and sustainable development of Jiangsu’s industry, it is imperative to formulate specific strategies toward the reduction of industrial water pollutant emissions. First, by the parameter quadratic directional output distance function and the shadow price model, this paper estimates the technical inefficiency and marginal abatement costs of industrial chemical oxygen demand (COD) and ammonia nitrogen (NH3–N) in Jiangsu Province between 2006 and 2017. Second, spatial and temporal distributions as well as the dynamic evolution tendencies of technical inefficiency, and abatement costs of industrial COD and NH3–N are analyzed. Third, the Morishima elasticity model is utilized to measure the output substitution elasticity of industrial COD and NH3–N for Jiangsu. The results show that the technical inefficiency of industrial water pollutants in Jiangsu Province followed a decreasing trend from 2006 to 2017; moreover, significant differences were found in technical inefficiency among different regions. Over time, the regional disparity followed a polarization trend. For Jiangsu Province, the marginal abatement cost of industrial COD increased rapidly and continuously, while the marginal abatement cost of industrial NH3–N showed fluctuating and marginal growth from 2006 to 2017. The marginal abatement cost of industrial COD in southern Jiangsu exceeded that of other regions; however, the marginal abatement cost of industrial NH3–N in northern Jiangsu was highest. Additionally, the negative sign of the Morishima output elasticity for Jiangsu indicates a “trade-off” relationship between gross industrial output and industrial water pollutants. Finally, according to the empirical results, corresponding policy recommendations are proposed.

A Review of Geothermal Technologies and Their Role in Reducing Greenhouse Gas Emissions in the USA

Abstract A review of conventional, unconventional, and advanced geothermal technologies highlights just how diverse and multi-faceted the geothermal industry has become, harnessing temperatures from 7 °C to greater than 350 °C. The cost of reducing greenhouse emissions is examined in scenarios where conventional coal or combined-cycle gas turbine (CCGT) power plants are abated. In the absence of a US policy on a carbon tax, the marginal abatement cost potential of these technologies is examined within the context of the social cost of carbon (SCC). The analysis highlights that existing geothermal heat and power technologies and emerging advanced closed-loop applications could deliver substantial cost-efficient baseload energy, leading to the long-term decarbonization. When considering an SCC of $25, in a 2025 development scenario, geothermal technologies ideally need to operate with full life cycle assessment (FLCA) emissions, lower than 50 kg(CO2)/MWh, and aim to be within the cost range of $30−60/MWh. At these costs and emissions, geothermal can provide a cost-competitive low-carbon, flexible, baseload energy that could replace existing coal and CCGT providing a significant long-term reduction in greenhouse gas (GHG) emissions. This study confirms that geothermally derived heat and power would be well positioned within a diverse low-carbon energy portfolio. The analysis presented here suggests that policy and regulatory bodies should, if serious about lowering carbon emissions from the current energy infrastructure, consider increasing incentives for geothermal energy development.

Societal benefits of halving agricultural ammonia emissions in China far exceed the abatement costs

Mitigating agricultural ammonia (NH3) emissions in China is urgently needed to avoid further damage to human and ecosystem health. Effective and feasible mitigation strategies hinge on integrated knowledge of the mitigation potential of NH3 emissions and the associated economic costs and societal benefits. Here we present a comprehensive analysis of marginal abatement costs and societal benefits for NH3 mitigation in China. The technical mitigation potential of agricultural NH3 emissions is 38–67% (4.0–7.1 Tg N) with implementation costs estimated at US$ 6–11 billion. These costs are much lower than estimates of the overall societal benefits at US$ 18–42 billion. Avoiding unnecessary fertilizer use and protein-rich animal feed could provide 30% of this mitigation potential without additional abatement costs or decreases in agricultural productivity. Optimizing human diets with less animal-derived products offers further potential for NH3 reduction of 12% by 2050.

Proportionally Matching Voluntary Contributions to Global Public Good Institutions: Proposed Mechanisms for Using Future Royalty Revenues from Deep Seabed Mining beyond National Jurisdiction

The International Seabed Authority might soon start collecting royalties from the mining of minerals on the bed of the deep sea beyond national jurisdiction. It has been proposed that this money be allocated to Global Public Good Institutions (GPGIs). This paper analyses a proposal that consists of allocating the money to GPGIs in proportion to the voluntary contributions that they receive from governments. I use a warm glow model to explain the status quo voluntary contributions to GPGIs as a Nash equilibrium. To predict how countries would adjust their contributions as a result of the proposed mechanism, I find a comparative statics formula depending on the elasticity of the marginal benefits created by the GPGIs. For the GPGIs dedicated to reducing deforestation, available marginal abatement cost curves suggest an elasticity of marginal benefits of -0.51. Decreasing marginal benefits lead to partial crowding out of voluntary contributions. However, there is a countervailing “matching reallocation effect” because by increasing their voluntary contributions to a GPGI countries cause a greater part of the money from the matching mechanism to go to this GPGI. Assuming that all GPGIs have the marginal benefit elasticity of -0.51, I show under some symmetry assumptions that the “matching reallocation effect” can cancel at most 22%\% of the crowding out caused as a result of the decreasing marginal returns, given the current pattern of voluntary contributions by countries. This sobering result potentially weighs in favor of alternative mechanisms that are less prone to crowding out effects, of which I discuss one.

Leadership and Free-Riding: Decomposing and Explaining the Paradox of Cooperation in International Environmental Agreements

This paper decomposes the canonical model of International Environmental Agreements (Barrett in Oxf Econ Pap 46:878–894, 1994) into three effects: externality, cost-effectiveness and timing. The externality and timing effects are countervailing forces on abatement levels of greenhouse gases. The Paradox of Cooperation in the three-stage Stackelberg game is explained by showing that when the gains to cooperation are small the timing effect dominates the externality effect and large coalitions are stable. The timing effect has the greatest impact when the high benefit nations have low abatement cost. The cost-effectiveness effect arises from asymmetry and generates the need for an agreement with transfers. The cost-effectiveness effect is largest when the high benefit nations are high cost. This creates a larger difference in the marginal abatement cost of the last unit of abatement in the absence of an agreement. Numerical examples illustrate how the parameters and effects interact to result in outcomes ranging from no to full participation.

Marginal Abatement Cost Curve of Industrial CO2 Capture and Storage – A Swedish Case Study

Carbon capture and storage (CCS) is expected to play a key role to achieve deep emission cuts in the energy intensive industry sector. The implementation of carbon capture comes with a considerable investment cost and a significant effect on the plants operating cost, which both depend on site conditions, mainly due to differences in flue gas flow and composition and depending on the availability of excess heat that can be utilized to power the capture unit. In this study we map the costs required to install and operate amine-based post-combustion CO2 capture at all manufacturing plants in Sweden with annual emissions of 500 kt CO2 or more, of both fossil and of biogenic origin, of which there are 28 plants (including a petrochemical site, refineries, iron and steel plants, cement plants and pulp and paper mills). The work considers differences in the investment required as well as differences in potential for using excess heat to cover the steam demand of the capture process. We present the resulting total CO2 capture costs in the form of a marginal abatement cost curve (MACC) for the emission sources investigated. Cost estimations for a transport and storage system are also indicated. The MACC shows that CO2 capture applied to 28 industrial units capture CO2 emissions corresponding to more than 50% of Swedish total CO2 emissions (from all sectors) at a cost ranging from around 40 €/t CO2 to 110 €/t CO2, depending on emission source. Partial capture from the most suited sites may reduce capture cost and, thus, may serve as a low-cost option for introducing CCS. The cost for transport and storage will add some 25 to 40 €/t CO2, depending on location and type of transportation infrastructure.

Study on Feasible Carbon Reduction Paths Based on CO2 Abatement Cost Curve

Estimation of CO2 abatement costs is a critical issue in achieving the targets of carbon emission reduction of China while promoting the economic growth. This paper builds an objective programming model to estimate the China’s marginal CO2 abatement costs during 2020-2030. We designed six different mitigation strategies based on China’s 60-65 percent carbon intensity reduction target by 2030 and investigated the total economic-wide cost of these strategies. The results show that the non-equal increasing strategies will significantly increase the overall cumulative carbon dioxide emission reduction and reduce the overall cost compared to the non-equal decreasing strategies and equal amount strategies.

Heterogeneity of UK residential heat demand and its impact on the value case for heat pumps

This study examines the heterogeneity of UK residential heat demand and how this diversity, along with social demographic and dwelling characteristic diversity, impacts the value case for heat pumps (HPs). The marginal abatement cost (MAC) of HPs is highly sensitive to the level of heat demand and technology assumptions. Care must be taken when interpreting the results from models with a high degree of aggregation. For similar dwellings, heat demand typically becomes lower for demographic groups that have higher levels of deprivation. For similar dwellings and demographics, households using natural gas typically have double the end-use heat demands of households with electric storage heaters. Therefore, if access to heating with similar costs to that of natural gas-fired heating is gained, the direct rebound effect suggests that the heat demands of households heated with electric storage heaters could double, particularly for households that have relatively high proportions of energy expenditure. Heating technology and building efficiency support mechanisms need to simultaneously address the wider goal of decarbonisation while reducing fuel poverty, and to incorporate measures of demand diversity into future assessment of heat policy that recognises how this rebound may oppose decarbonisation efforts but enable improvements in comfort, welfare and health standards.

Shadow prices and marginal abatement costs: Convex quantile regression approach

Marginal abatement cost (MAC) is a critically important concept for efficient environmental policy and management. In this paper we argue that most empirical studies using frontier estimation methods such as data envelopment analysis (DEA) over-estimate MACs. The first methodological contribution of this paper is to clarify the conceptual distinction between the shadow price and MAC in order to analyze three sources of upward bias due to the limited set of abatement options, inefficiency, and noisy data. Our second methodological contribution is to develop a novel MAC estimation approach based on convex quantile regression. Compared to the traditional methods, convex quantile regression is more robust to the choice of the direction vector, random noise, and heteroscedasticity. Empirical application to the U.S. electric power plants demonstrates that the upward bias of DEA may be a serious problem in real-world applications.

Greenhouse gas emission abatement potential and associated costs of integrating renewable and low carbon energy technologies into the Canadian oil sands

The purpose of this research is to evaluate the greenhouse gas reduction potential and associated costs of integrating renewable energy technologies into Canada’s oil sands . There is very limited analysis in the literature focused on the integration of renewable technology options in oil sands processes. This research addresses the gap by developing a novel framework that applies market penetration and bottom-up energy modeling techniques. A total of 27 long-term scenarios across oil sands extraction, upgrading, and electricity generation were investigated. The results show that up to 84 million tonnes of greenhouse gas emissions abatement (2.3% of oil sands GHG emissions) at a marginal greenhouse gas abatement cost of $1.3/tCO2e is available under a $30/tonne carbon incentive. Scenarios with no carbon incentive resulted in 69 million tonnes less greenhouse gas emissions abatement and a marginal greenhouse gas abatement cost increase of $36/tCO2e. Nuclear-based scenarios mitigated the largest amount of greenhouse gases and had the lowest marginal abatement costs. Geothermal energy, bioenergy, and hydropower were cost effective in certain scenarios but had limited greenhouse gas emission reduction potential. Wind and solar technologies failed to displace existing processes in the scenarios considered. The results from this study may be of value to government policy makers and industry representatives aiming to reduce greenhouse gases.