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Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis

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  • Du, Limin
  • Hanley, Aoife
  • Wei, Chu

Abstract

This paper estimates the Marginal Abatement Cost Curve (MACC) of CO2 emissions in China based on a provincial panel for the period of 2001–2010. The provincial marginal abatement cost (MAC) of CO2 emissions is estimated using a parameterized directional output distance function. Four types of model specifications are applied to fit the MAC-carbon intensity pairs. The optimal specification controlling for various covariates is identified econometrically. A scenario simulation of China's 40–45% carbon intensity reduction based on our MACC is illustrated. Our simulation results show that China would incur a 559–623Yuan/t (roughly 51–57%) increase in marginal abatement cost to achieve a corresponding 40–45% reduction in carbon intensity compared to its 2005 level.

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  • Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    • Handle: RePEc:eee:eneeco:v:48:y:2015:i:c:p:217-229
    DOI: 10.1016/j.eneco.2015.01.007
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    More about this item

    Keywords

    CO2 emissions; Marginal Abatement Cost Curve; Model selection; China;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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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