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When starting with the most expensive option makes sense : use and misuse of marginal abatement cost curves

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  • Vogt-Schilb, Adrien
  • Hallegatte, Stephane

Abstract

This article investigates the use of expert-based Marginal Abatement Cost Curves (MACC) to design abatement strategies. It shows that introducing inertia, in the form of the"cost in time"of available options, changes significantly the message from MACCs. With an abatement objective in cumulative emissions (e.g., emitting less than 200 GtCO2 in the 2000-2050 period), it makes sense to implement some of the more expensive options before the potential of the cheapest ones has been exhausted. With abatement targets expressed in terms of emissions at one point in time (e.g., reducing emissions by 20 percent in 2020), it can even be preferable to start with the implementation of the most expensive options if their potential is high and their inertia significant. Also, the best strategy to reach a short-term target is different depending on whether this target is the ultimate objective or there is a longer-term target. The best way to achieve Europe's goal of 20 percent reduction in emissions by 2020 is different if this objective is the ultimate objective or if it is only a milestone in a trajectory toward a 75 percent reduction in 2050. The cheapest options may be sufficient to reach the 2020 target but could create a carbon-intensive lock-in and preclude deeper emission reductions by 2050. These results show that in a world without perfect foresight and perfect credibility of the long-term carbon-price signal, a unique carbon price in all sectors is not the most efficient approach. Sectoral objectives, such as Europe's 20 percent renewable energy target in Europe, fuel-economy standards in the auto industry, or changes in urban planning, building norms and infrastructure design are a critical part of an efficient mitigation policy.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5803.

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Date of creation: 01 Sep 2011
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Handle: RePEc:wbk:wbrwps:5803

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Keywords: Climate Change Mitigation and Green House Gases; Climate Change Economics; Environment and Energy Efficiency; Energy and Environment; Transport and Environment;

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References

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Citations

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Cited by:
  1. repec:fae:wpaper:2014.05 is not listed on IDEAS
  2. repec:hal:ciredw:hal-00850682 is not listed on IDEAS
  3. Lecuyer, Oskar & Quirion, Philippe, 2013. "Can uncertainty justify overlapping policy instruments to mitigate emissions?," Ecological Economics, Elsevier, vol. 93(C), pages 177-191.
  4. Adrien Vogt-Schilb & Guy Meunier & Stéphane Hallegatte, 2012. "How inertia and limited potentials affect the timing of sectoral abatements in optimal climate policy," Post-Print hal-00722574, HAL.
  5. Oskar Lecuyer & Adrien Vogt-Schilb, 2013. "Assessing and ordering investments in polluting fossil-fueled and zero-carbon capital," Post-Print hal-00850680, HAL.
  6. Vogt-Schilb, Adrien & Meunier, Guy & Hallegatte, Stephane, 2013. "Should marginal abatement costs differ across sectors ? the effect of low-carbon capital accumulation," Policy Research Working Paper Series 6415, The World Bank.
  7. Vogt-Schilb, Adrien & Hallegatte, Stephane & de Gouvello Christophe, 2014. "Long-term mitigation strategies and marginal abatement cost curves : a case study on Brazil," Policy Research Working Paper Series 6808, The World Bank.
  8. repec:hal:ciredw:hal-00850680 is not listed on IDEAS
  9. repec:hal:wpaper:hal-00850680 is not listed on IDEAS
  10. repec:hal:wpaper:hal-00866440 is not listed on IDEAS
  11. Stéphane Hallegatte & Geoffrey Heal & Marianne Fay & David Treguer, 2012. "From Growth to Green Growth - a Framework," NBER Working Papers 17841, National Bureau of Economic Research, Inc.
  12. repec:hal:ciredw:hal-00866440 is not listed on IDEAS
  13. repec:hal:wpaper:hal-00850682 is not listed on IDEAS
  14. repec:hal:wpaper:hal-00866442 is not listed on IDEAS

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