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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 percent carbon intensity reduction based on our MACC is illustrated. Our simulation results show that China would incur a 559-623 Yuan/ton (roughly 51-57 percent) increase in marginal abatement cost to achieve a corresponding 40-45 percent 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," Kiel Working Papers 1985, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1985
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    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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