Marginal Abatement Cost Curves (MACC): Unsolved issues, anomalies, and alternative proposals

Abstract

Policy makers proposed the MACC as an instrument to rank possible mitigation measures available in a market. This tool orders measures according to their cost-efficiency, taking into account only two variables: costs and emissions reductions. Although this tool has been used in relevant settings like the first treaty of the United Nations Framework Convention on Climate Change (UNFCCC), it has shown mathematical failures that might produce unreliable rankings. This chapter presents existing alternatives to the use of traditional MACC for ranking GHG abatement measures: (1) Taylor’s method by the application of the dominance concept. (2) Ward’s method directly related to the net benefit of each measure. (3) The GM method, which supports an environmentalist attitude and performs a direct comparison of measures with negative and positive costs. (4) An extension of traditional MACC (EMAC method), that considers the economically driven point of view of the decision maker, weighting the negative cost options according to its economic savings over its reduction potential. (5) And the BOM method, consisting of a linear-weighted combination of two discretional seed methods, allowing decision makers to take into account the goodness of multiple methods in order to create new rankings adjustable to a specific GHG policy, whether it is fully or partially driven by economical or environmental positions. Finally, several case studies and discussions are presented showing the advantages of the exposed methods.