This presentation discusses the use and limitations of marginal abatement cost (MAC) curves. MAC curves show the estimated cost of reducing emissions for various technologies and the potential emissions reductions. They are used widely in policymaking but have several shortcomings. Specifically, the assumptions used to calculate costs are often unclear and implementation barriers are not fully captured. When applied to reducing emissions from deforestation and forest degradation (REDD), MAC curves overlook uncertainty in baseline emissions and implementation costs. While MAC curves provide a simple illustration of abatement options, they must be used cautiously, especially in debates around REDD.

1. Marginal abatement cost curves: a call for cautionFabian KesickiUN Climate Change Conference (SB 34) in Bonn, 7th June 2011

2. This presentation is based on the report ‘Marginal Abatement Cost Curves: a Call for Caution’ written by Ekins, P., Kesicki, F. and A. Smith A research article of the same name is forthcoming in Climate Policy. 2

4. Policy Use of MAC curves

5. Shortcomings

6. MAC Curves and REDD (Reducing Emissions from Deforestation and Forest Degradation) OVERVIEW 3

7. MAC CURVE CONCEPT Electric heat pump Gas CCS Electric boiler Coal CCS Biomass Solar PV Solar CSP Geothermal Offshore wind Efficiency improvement Onshore wind Cars plug-in Nuclear Cars full hybrid Residential appliances Insulation retrofit Residential electronics 4

9. Electricity saving

10. Air pollution

11. Waste reduction

12. Water availability

13. Energy-related emissions reduction

14. REDD

15. Many countries:

16. USA, EU, UK, France, Mexico, China

17. REDD: Congo for example5

19. Cost definition

20. Implementation barriers

21. Discounting

22. Intertemporal issues

23. Interactions / baseline emissions

24. Behavioural aspects

25. Ancillary benefits/costs

26. Handling uncertainty

27. Financial focus6

28. ELECTRIC HYBRID CAR EXAMPLE 7

30. MAC CURVES AND REDD Nabuurs et al. 2007 Kindermann et al. 2008 Eliasch 2008 Grieg-Gran 2008 Nauclér and Enkvist 2009 Kindermann et al. 2008 Stern 2007 Holdren 2007 (Brazil only) Blaser and Robledo 2007

32. Focus on opportunity cost without considering administration, implementation, monitoring costs

33. Price discrimination

34. Potential leakage

35. Interactions with demand for bioenergy, timber industry10

37. Previously outlined caveats may have been overlooked in the past

38. MAC curves should be applied very carefully in the REDD debate11

39. Thanks for your attentionFabian Kesickifabian.kesicki.09@ucl.ac.uk