An innovative model-based approach to CO2 marginal abatement cost

Mr Fabian Kesicki, UCL Energy Institute

Policy makers in the UK as in many countries around the world are confronted with the task of how to reduce carbon emissions in a cost-efficient way. For this purpose, marginal abatement cost (MAC) curves have been frequently used to illustrate the economics of climate change mitigation and have contributed to decision making in the context of climate policy. So far decision makers have in general relied on expert-based MAC curves, which assess the abatement cost and the abatement potential of each measure individually. However, such cost curves are not able to capture behavioural, technological, economic and intertemporal interactions.

In order to overcome these shortcomings, a new approach to deriving MAC curves is demonstrated, through the combination of an integrated energy system model (UK MARKAL) and index decomposition analysis. This permits one to generate a consistent carbon abatement cost curve with a high degree of technological detail together with behavioural change. Furthermore, this approach allows a structured consideration of uncertainty. To illustrate and validate this new approach a MAC curve is calculated for the UK transport sector in 2020 and compared to existing work for the Committee on Climate Change.

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