Marginal Abatement Cost Curves: Combining Energy System Modelling and Decomposition Analysis

Various policies have been implemented in the last decade to tackle rising greenhouse gas emissions. In this context it remains an open question of how to find a cost-efficient approach to climate change mitigation. Marginal abatement cost (MAC) curves are a useful tool to communicate findings on the technological structure and the economics of CO2 reduction to decision makers. Existing ways of generating MAC curves fail to combine technological detail in the graphical representation with the incorporation of system-wide interactions and a framework for uncertainty analysis. This paper suggests a new approach to overcome the present shortcomings by using a bottom-up energy system model in combination with index decomposition analysis. For illustration purposes, this technique is applied to the transport sector of the United Kingdom in scenarios with varied fossil fuel production cost assumptions for the year 2030. The resulting MAC curves are found to be relatively robust to different fuel costs. The findings indicate that CO2 reduction comes first from fuel decarbonisation, i.e. electricity, hydrogen and diesel, and at higher CO2 prices from structural shifts. A minor contribution to emission savings comes from demand reduction, while efficiency improvements do not contribute to emission savings.

Marginal Abatement Cost Curves: Combining Energy System Modelling and Decomposition Analysis. In: (Proceedings) International Energy Workshop. 

KESICKI, F; (2010)