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Marginal Abatement Cost Curves (MACC): The need for an evolutionary approach
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.).ORCID iD: 0000-0001-7028-0624
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.).ORCID iD: 0000-0001-5912-441X
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.).
2013 (English)In: IAMOT2013 Proceedings, 2013Conference paper, Published paper (Refereed)
Abstract [en]

Marginal Abatement Cost Curves (MACC) has become standard decision making tools in evaluating options for CO2 abatement. Originally derived for optimizing investments in energy conservation after the oil crises during the 1970s and early 1980s under the name Conservation Supply Curves (CSC) today the discussions on climate change mitigation has given them renewed relevancy to identify the optimum CO2 abatement options for industry and a decision base to devise emission trading schemes or taxes for policy makers.Historically, the development of MACC adopted an iterative process in revealing the optimal route for energy conservation. However, today the iterative process is often dropped in favour of simpler (stand alone) analysis of individual options without regard to dynamic interrelationships. How does this affect economic and abatement performance?The aim of this paper is to analyse the limits of using the MACC model in circumstances where there are highly interdependent options such as within energy systems. We have conducted simulations to examine possible abatement options for the Stockholm district heating network according to the base production plan of the energy provider Fortum Värme. The base production plan includes options decided on or under consideration and planned to be implemented before 2018. The result shows that if an evolutionary approach is not used, the abatement potential for the Stockholm district heating network is overestimated with 19% or 63 kton CO2 p.a. At the same time, cost reductions are overestimated with 329% or 197 MSEK p.a. This means that when the abatement options are subject to dynamic relationships, the effect relative to the now dominant approach to MACC is of concern. The results also show suggested measures to be rational during an iterative process, becoming redundant when an evolutionary approach is applied. The main lesson is that dynamic interrelations between abatement options must never be neglected when performing a MACC-analysis. An evolutionary approach must be applied where the growth of the whole system is taken into account, including changes with negative or no effect on CO2 emissions.

Place, publisher, year, edition, pages
2013.
Keyword [en]
MACC, CO2 abatement, Investments, District Heating, Evolutionary Approach, Climate Change Policy
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:kth:diva-121059OAI: oai:DiVA.org:kth-121059DiVA: diva2:616775
Conference
22nd International Conference on Management of Technology; Porto Alegre, Brazil 14-18 April 2013
Note

QC 20130823

Available from: 2013-04-18 Created: 2013-04-18 Last updated: 2013-08-23Bibliographically approved

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Levihn, FabianNuur, Cali

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