Cost
The focus in this study has been on abatement opportunities at a cost below €40/tonne CO2e. Some possibilities at a higher cost are included, either because they are linked to other less expensive measures, or because it is considered likely that they will be implemented for political reasons. Thus the study does not extensively cover the higher cost abatement opportunities.
Abatement at zero or negative cost
The abatement potential can be divided into at least three distinctive groups. First of all, there is a significant potential already at a zero or even negative abatement cost. This potential can mostly be found in the buildings and transport sectors. The costs included here are basically costs relating to additional investments and changes in operation and maintenance costs. The negative abatement costs stem from the fact that the additional investment costs are more than compensated for by a decrease in the costs for energy. In addition to these costs, it is likely that there are transaction costs, as well as more intangible costs relating to how people perceive the services rendered from different appliances.
Abatement below €40 per tonne
The second group consists of abatement opportunities that could be realized given a long-term and stable international system with a price on carbon dioxide of €40 per tonne. The majority of these measures have an economic lifetime of more than 15 years, which makes a long-term and stable system essential for the unlocking of this potential.
Abatement above €40 per tonne
The third group consists of abatement opportunities at a cost above €40 per tonne. Some of these opportunities may be realized primarily because of the existence of other types of regulations. There is also a possibility to reduce the costs of these measures in the longer run, but this may require targeted innovation support, e.g. in the form of subsidies.
Average abatement cost per sector
The weighted average abatement cost is estimated to be about €2 per tonne CO2e for the abatement potential at a marginal cost of €40 per tonne or lower. Estimated zero or negative costs abatement opportunities in the transportation and buildings sector drive the low average cost. If the opportunities with negative costs are valued at zero, the average cost increases to about €15 per tonne CO2e. The average abatement costs differ significantly between sectors. The buildings sector has large negative average abatement cost € -93/tonne CO2e. This low average cost comes from the fact that many of the energy efficiency measures are profitable in their own right, since savings from increased energy efficiency outweighs the increased investment and operation costs. However, this does not take into account the cost of perceived differences in quality, for instance the light from energy efficient bulbs that may be perceived as less comfortable than conventional light bulbs. The choice of discounting rate is also important and a matter for discussion among experts. With a more conservative approach, valuing the negative cost abatement opportunities within the sector at zero, the average cost within the sector will also be zero. The average abatement cost within the transport sector is also negative, about €-9/tonne CO2e, since there is abatement potential with negative abatement costs also in this sector. Again, for similar reasons as for the buildings sector, with a more conservative approach valuing the negative cost abatement potential at zero the average cost for this sector will also be zero. The challenge for both these sectors would be to actually achieve these abatements. The agriculture & waste sector has some low cost, abatement possibilities, and the average abatement cost is estimated to € 13/tonne CO2e. However, implementation is very challenging since more than 60% of the potential is found in developing countries, with diffuse sources, difficulties in measurement and monitoring and a strong relation to poverty issues. Forestry has a substantially higher average abatement cost at about €23 per tonne CO2e. There are some key challenges related to measuring and monitoring emissions, establishing a baseline, a substantial lag between initial investments and payment and how to deal with uncertainties. The power sector and the industrial sector have average abatement costs at €21 and €23 per tonne CO2e respectively. Compared with the previous sectors the possibilities of achieving the abatement is substantially higher, particularly since these sectors are expected to respond to economic signals to a much higher degree. The possibilities for measurement and monitoring are also better.
Jump directly to: Top of text , Search , Main navigation , sub navigation , meta navigation , Top of page
