The applicability of marginal abatement cost approach: A comprehensive review

Abstract

The Marginal Abatement Cost (MAC) methodology is widely used in climate change policies. Policy makers rely on MAC to assess feasible strategies and related costs to achieve emission reduction goals. This paper introduces a variety of MAC methodologies, aiming at solving diverse problems, which utilizes various calculable-logic, thus producing different results and implications. This study applies a mind mapping method to capture differentiation of MAC methods, and systematically classify MAC methodologies. The applicability path analysis was proposed, based on principles such as stakeholder type, decision-making objectives, cost concept, strategy mode and information scope. Our goal is to assess the applicability of different methodologies, to reduce misuse by policy-makers, and to serve as a guide for subsequent research, which might prompt and lead to the derivation of more consequential results in future studies. The results of this study suggest that the complex method is not always better than the simplified method because policy-makers are required to select the appropriate method according to the type of information needed. It may even be suggested that MAC could be reliable by ranking relative-value of options compared with baseline, rather than focusing on the absolute value of individual measures. (C) 2016 Elsevier Ltd. All rights reserved.