User:Sustainablejohn24/Marginal Abatement Cost Curve

A Marginal Abatement Cost Curve is a set of options available to an economy to reduce emissions. They are valuable tools in understanding emissions trading, driving forecasts of carbon allowance prices, prioritizing investment opportunities, and shaping policy discussions.

For example, carbon traders use marginal abatement cost (MAC) curves to derive the supply function for modelling carbon price fundamentals. Power companies may employ MAC curves to guide their decisions about long-term capital investment strategies to select among a variety of efficiency and generation options. Economists have used MAC curves to explain the economics of interregional carbon trading, and policy-makers turn to MAC curves to show how much abatement an economy can afford and where policy should be directed to achieve the emission reductions.

Various economists, research organizations, and consultancies have produced MAC curves. Bloomberg New Energy Finance and McKinsey & Company have produced economy wide analyses on greenhouse gas emissions reductions for the United States. ICF International produced a California specific curve following AB-32 legislation as have Sweeney and Weyant. The US Environmental Protection Agency has done work on a MAC curve for non carbon dioxide emissions such as methane, N2O, and HFCs.

Typically, MAC curves cover emissions reduction opportunities across a number of sectors in an economy including power, industry, waste, buildings, transport, agriculture, and forestry.