Publication: Development of Marginal Abatement Cost Curves for the Building Sector in Armenia and Georgia
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Date
2017-09
ISSN
0301-4215
Published
2017-09
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Armenia and Georgia are taking climate change agenda seriously and contributing to efforts for mitigating global climate change through various ways including preparation of low carbon development strategies for their future economic growth. The improvement of energy efficiency is one of the key elements of the low carbon development strategies. This study develops a methodology to estimate marginal abatement cost (MAC) curve for energy efficiency measures and apply in the building sector in both countries. The study finds that among the various energy efficiency measures considered, the replacement of energy inefficient light bulbs (i.e., incandescent lamps) with efficient light bulbs is the most cost effective measure in saving energy and reducing greenhouse gas (GHG) emissions from the building sector. Most energy efficiency improvement options considered in the study would produce net economic benefits even if the value of reduced carbon is not taken into account. While the MAC analysis conducted demonstrates the cost competitiveness of various energy efficiency measures in Armenia and Georgia, the study also offers a caution to policy makers to have supplemental analysis before prioritizing the implementation of these measures or introducing policies to support them.
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Publication How Do We Prioritize the GHG Mitigation Options?(World Bank, Washington, DC, 2016-06)Armenia and Georgia are taking the climate change agenda seriously and contributing to efforts for mitigating global climate change through various ways, including preparation of low-carbon development strategies for their future economic growth. The improvement of energy efficiency is one of the key elements of the low-carbon development strategies. This study develops a methodology to estimate a marginal abatement cost curve for energy efficiency measures and applies it to the building sector in both countries. The study finds that among the various energy efficiency measures considered, the replacement of energy inefficient lightbulbs (incandescent lamps) with efficient lightbulbs is the most cost-effective measure in saving energy and reducing greenhouse gas emissions from the building sector. Most energy efficiency improvement options considered in the study would produce net economic benefits even if the value of reduced carbon is not taken into account.Publication Long-Term Mitigation Strategies and Marginal Abatement Cost Curves : A Case Study on Brazil(World Bank, Washington, DC, 2014-03)Decision makers facing abatement targets need to decide which abatement measures to implement, and in which order. This paper investigates the ability of marginal abatement cost (MAC) curves to inform this decision, reanalysing a MAC curve developed by the World Bank on Brazil. Misinterpreting MAC curves and focusing on short-term targets (e.g., for 2020) would lead to under-invest in expensive, long-to-implement and large-potential options, such as clean transportation infrastructure. Meeting short-term targets with marginal energy-efficiency improvements would lead to carbon-intensive lock-ins that make longer-term targets (e.g., for 2030 and beyond) impossible or too expensive to reach. Improvements to existing MAC curves are proposed, based on (1) enhanced data collection and reporting; (2) a simple optimization tool that accounts for constraints on implementation speeds; and (3) new graphical representations of MAC curves. Designing climate mitigation policies can be done through a pragmatic combination of two approaches. The synergy approach is based on MAC curves to identify the cheapest mitigation options and maximize co-benefits. The urgency approach considers the long-term objective (e.g., halving emissions by 2050) and works backward to identify actions that need to be implemented early, such as public support to clean infrastructure and zero-carbon technologies.Publication Applying Abatement Cost Curve Methodology for Low-Carbon Strategy in Changning District, Shanghai(Washington, DC, 2013-11)The speed and scale of urbanization provide an unprecedented opportunity in the coming years to invest in clean energy technologies to contain carbon emissions from the country's sprawling cities. Therefore, supporting low carbon cities is one of the government's top priorities. Shanghai municipal and changning district governments are firmly committed to the transition to a low-carbon city and requested for the World Bank's support in making changning district and Shanghai leaders in designing novel and efficient ways to achieve carbon-intensity-reduction targets. This report documents the methodology of and key findings from applying abatement cost curves and scenarios to set low-carbon targets and define cost-effective low-carbon investment programs in Changning district, Shanghai. At the request of changning district government, the Bank team supported a Shanghai energy conservation institution, assisted by an international firm, in conducting a comprehensive survey of buildings in Hongqiao area in the changning district, and in developing carbon dioxide (CO2) abatement cost curves to identify the abatement potential, cost, and ease of implementation of various mitigation measures. Three alternative abatement scenarios were developed to establish an ambitious low-carbon target for Hongqiao area. The use of CO2 abatement cost curves, bottom-up investigation surveys, and ease-of-implementation considerations for defining an investment program to reduce CO2 emissions were the first of its kind at the time. 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It includes the following chapters: executive summary; the objectives: 12th five-year plan carbon intensity reduction target and beyond; the methodology: a bottom-up and comprehensive approach; the bottom-up survey: data collection and identification of abatement technologies; the abatement measures: carbon abatement cost curves; the abatement priorities: abatement technologies ranked by cost and ease of implementation; the low-carbon targets: abatement scenarios for 2015 and 2020; from abatement cost curve to implementation: green energy for low-carbon city in Shanghai project; and the significance: potential replications in other cities.Publication Should Marginal Abatement Costs Differ Across Sectors? The Effect of Low-Carbon Capital Accumulation(World Bank, Washington, DC, 2013-04)The optimal timing, sectoral distribution, and cost of greenhouse gas emission reductions is different when abatement is obtained though abatement expenditures chosen along an abatement cost curve, or through investment in low-carbon capital. In the latter framework, optimal investment costs differ in each sector: they are equal to the value of avoided carbon emissions, minus the value of the forgone option to invest later. It is therefore misleading to assess the cost-efficiency of investments in low-carbon capital by comparing levelized abatement costs, that is, efforts measured as the ratio of investment costs to discounted abatement. The equimarginal principle applies to an accounting value: the Marginal Implicit Rental Cost of the Capital (MIRCC) used to abate. Two apparently opposite views are reconciled. On the one hand, higher efforts are justified in sectors that will take longer to decarbonize, such as urban planning; on the other hand, the MIRCC should be equal to the carbon price at each point in time and in all sectors. Equalizing the MIRCC in each sector to the social cost of carbon is a necessary condition to reach the optimal pathway, but it is not a sufficient condition. Decentralized optimal investment decisions at the sector level require not only the information contained in the carbon price signal, but also knowledge of the date when the sector reaches its full abatement potential.Publication When Starting with the Most Expensive Option Makes Sense : Use and Misuse of Marginal Abatement Cost Curves(2011-09-01)This article investigates the use of expert-based Marginal Abatement Cost Curves (MACC) to design abatement strategies. It shows that introducing inertia, in the form of the "cost in time" of available options, changes significantly the message from MACCs. With an abatement objective in cumulative emissions (e.g., emitting less than 200 GtCO2 in the 2000-2050 period), it makes sense to implement some of the more expensive options before the potential of the cheapest ones has been exhausted. With abatement targets expressed in terms of emissions at one point in time (e.g., reducing emissions by 20 percent in 2020), it can even be preferable to start with the implementation of the most expensive options if their potential is high and their inertia significant. Also, the best strategy to reach a short-term target is different depending on whether this target is the ultimate objective or there is a longer-term target. The best way to achieve Europe's goal of 20 percent reduction in emissions by 2020 is different if this objective is the ultimate objective or if it is only a milestone in a trajectory toward a 75 percent reduction in 2050. The cheapest options may be sufficient to reach the 2020 target but could create a carbon-intensive lock-in and preclude deeper emission reductions by 2050. These results show that in a world without perfect foresight and perfect credibility of the long-term carbon-price signal, a unique carbon price in all sectors is not the most efficient approach. Sectoral objectives, such as Europe's 20 percent renewable energy target in Europe, fuel-economy standards in the auto industry, or changes in urban planning, building norms and infrastructure design are a critical part of an efficient mitigation policy.
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