• Jamil Farbes

Marginal Abatement Costs: A Systems Approach

Updated: Mar 31

Marginal abatement cost (MAC) curves have become the de facto starting point for comparing GHG emission reduction measures since being popularized more than a decade ago. While these analyses remain widely recognized, traditional MAC methodologies are ill-suited for providing key insights for achieving net-zero emissions by 2050. A new MAC approach is needed to illustrate how the coordinated deployment of low- and zero-carbon measures is necessary for the energy system to reach net-zero CO2 by 2050.

The Environmental Defense Fund commissioned EER to develop a new MAC methodology and curve that addresses many of the shortcomings of traditional MAC approaches. This novel, system-level approach to assessing the marginal abatement cost of emission savings among different measures, captures critical interactions between technologies and across energy-use sectors. We also propose a new structure for MAC curves (below) that better conveys the cost-effectiveness of deploying multiple measures at a single marginal abatement cost.

These new MAC curves and the underlying methodology can be a valuable addition to the toolkit for policymakers formulating ambitious decarbonization policies. Insights for policymakers based on our analysis of reducing CO2 emissions in the U.S. energy and industry sectors include:

  • Under a supportive policy framework, zero-emissions vehicles, building efficiency and electrification, and electricity decarbonization measures could save over two gigatons of CO2 in 2050 at marginal abatement costs ranging from negative to very modest (less than $60 per ton).

  • Decarbonization beyond these initial two-plus gigatons will require further coordination of measure deployment. Effective policy formulations will anticipate the need for both low-cost and higher-cost measures and focus on enabling the deployment of high levels of electric vehicles and renewables.

  • Fuels decarbonization, including hydrogen and liquids fuels, could save a little over one gigaton of CO2 by 2050, but will require deploying technologies that are not yet commercial or not currently deployed at a significant scale. Support for these technologies today will be important to achieve net-zero emissions.

The report describes the new methodology and MAC curve, discusses insights from this approach, and offers implications for policymakers.

MACC_2.0 report 20210728
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