Working Paper

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


  • DU
  • L.
  • Hanley
  • A.
  • WEI
  • C.
Publication Date

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.

Kiel Institute Expert


JEL Classification
Q52, Q54, Q58

Key Words

  • China
  • CO2 Emissionen
  • CO2 Emissions
  • Marginal Abatement Cost Curve
  • Model Selection

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