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The static and dynamic heterogeneity and determinants of marginal abatement cost of CO2 emissions in Chinese cities

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  • Wu, Jianxin
  • Ma, Chunbo
  • Tang, Kai

Abstract

Using a newly constructed panel dataset of 286 Chinese cities for 2002–2013, we examine the static and dynamic distribution and determinants of marginal abatement cost (MAC) of CO2. We find that: 1) there has been a steady increase of the estimated mean MAC for CO2 emissions over the studied period; 2) there is substantial heterogeneity in the estimated MAC across regions with eastern cities having the highest MAC and northeastern cities having the lowest; 3) the distribution dynamics analysis shows that there is no clear tendency of convergence in the steady state distribution of MAC in the long term. The findings provide strong support for a market-based policy instrument for CO2 mitigation in China. Our regression model also reveals a U-shaped relationship between MAC and CO2 emission intensity with most cities located to the left-hand side of the turning point by 2013. This also provides significant implications on the cost burden of complying with various intensity-based mitigation targets under China's current regulatory regime.

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  • Wu, Jianxin & Ma, Chunbo & Tang, Kai, 2019. "The static and dynamic heterogeneity and determinants of marginal abatement cost of CO2 emissions in Chinese cities," Energy, Elsevier, vol. 178(C), pages 685-694.
    • Handle: RePEc:eee:energy:v:178:y:2019:i:c:p:685-694
    DOI: 10.1016/j.energy.2019.04.154
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