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Carbon abatement in the European chemical industry: assessing the feasibility of abatement technologies by estimating firm-level marginal abatement costs

Author

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  • Rekker, Lennard
  • Kesina, Michaela
  • Mulder, Machiel

Abstract

As many other industries, the chemical industry has to strongly reduce its' carbon emissions, for which various abatement technologies exist. We study the economic feasibility of these abatement technologies by estimating the Marginal Abatement Cost (MAC) of CO2 emissions for 24 firms in the European chemical sector over the period 2015–2020. We estimate the firm-level MAC by using a quadratic directional output distance function (DDF) model. We find a median MAC of 429 €/t CO2, which is significantly above current carbon prices, indicating that most firms in this industry prefer to use carbon allowances instead of reducing their own emissions. We conclude that carbon abatement in the chemical industry is only likely when the carbon price is significantly higher or when financial support is provided for certain abatement technologies, such as renewable hydrogen and bio-based ammonia.

Suggested Citation

  • Rekker, Lennard & Kesina, Michaela & Mulder, Machiel, 2023. "Carbon abatement in the European chemical industry: assessing the feasibility of abatement technologies by estimating firm-level marginal abatement costs," Energy Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323003870
    DOI: 10.1016/j.eneco.2023.106889
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    Cited by:

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    2. Xing Zhou & Jianze Xu & Ming Zhang & Anyi Niu & Chuxia Lin, 2025. "Gaps between market performance, government planning and social objectives: projections and comparisons of carbon price intervals," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-20, December.
    3. Saurav Kumar & Taniya Ghosh & Shesadri Banerjee, 2025. "Carbon credit trading and India's green transition," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2025-027, Indira Gandhi Institute of Development Research, Mumbai, India.
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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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