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Sustainability 2017, 9(1), 138; doi:10.3390/su9010138

Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective

School of Economics and Management, North China Electric Power University, Hui Long Guan, Chang Ping District, Beijing 102206, China
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Academic Editor: Francesco Asdrubali
Received: 15 November 2016 / Revised: 12 January 2017 / Accepted: 13 January 2017 / Published: 18 January 2017
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Abstract

Industrial sectors account for around 70% of the total energy-related CO2 emissions in China. It is of great importance to measure the potential for CO2 emissions reduction and calculate the carbon price in industrial sectors covered in the Emissions Trading Scheme and carbon tax. This paper employs the directional distance function to calculate the marginal abatement costs of CO2 emissions during 2005–2011 and makes a comparative analysis between our study and the relevant literature. Our empirical results show that the marginal abatement costs vary greatly from industry to industry: high marginal abatement costs occur in industries with low carbon intensity, and vice versa. In the application of the marginal abatement cost, the abatement distribution scheme with minimum cost is established under different abatement targets. The conclusions of abatement distribution scheme indicate that those heavy industries with low MACs and high carbon intensity should take more responsibility for emissions reduction and vice versa. Finally, the policy implications for marginal abatement cost are provided. View Full-Text
Keywords: marginal abatement cost; CO2 emissions; distance function; industrial sectors; abatement distribution scheme marginal abatement cost; CO2 emissions; distance function; industrial sectors; abatement distribution scheme
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Xiao, B.; Niu, D.; Wu, H.; Wang, H. Marginal Abatement Cost of CO2 in China Based on Directional Distance Function: An Industry Perspective. Sustainability 2017, 9, 138.

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