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The static and dynamic heterogeneity and determinants of marginal abatement cost of CO2 emissions in Chinese cities

Jianxin Wu, Chunbo Ma and Kai Tang

Energy, 2019, vol. 178, issue C, 685-694

Abstract: Using a newly constructed panel dataset of 286 Chinese cities for 2002–2013, we examine the static and dynamic distribution and determinants of marginal abatement cost (MAC) of CO2. We find that: 1) there has been a steady increase of the estimated mean MAC for CO2 emissions over the studied period; 2) there is substantial heterogeneity in the estimated MAC across regions with eastern cities having the highest MAC and northeastern cities having the lowest; 3) the distribution dynamics analysis shows that there is no clear tendency of convergence in the steady state distribution of MAC in the long term. The findings provide strong support for a market-based policy instrument for CO2 mitigation in China. Our regression model also reveals a U-shaped relationship between MAC and CO2 emission intensity with most cities located to the left-hand side of the turning point by 2013. This also provides significant implications on the cost burden of complying with various intensity-based mitigation targets under China's current regulatory regime.

Keywords: China; CO2 emissions; DEA; Distance function; Marginal abatement cost (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:energy:v:178:y:2019:i:c:p:685-694