October 3, 2011

When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves

by Adrien Vogt-Schilb and St├ęphane Hallegatte

- The 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.

Vogt-Schilb, A., et S. Hallegatte (2011). "When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves." World Bank Policy Research Working Paper, Sept 2011.