Assessing the Cost-Effectiveness of Incentives for Energy Transition Using Marginal Abatement Cost Curves

Sofia Billi, Matteo Giacomo Prina (), Marco Castagna and Wolfram Sparber
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Sofia Billi: Institute for Renewable Energy, Eurac Research, Viale Druso 1, 39100 Bolzano, Italy
Matteo Giacomo Prina: Institute for Renewable Energy, Eurac Research, Viale Druso 1, 39100 Bolzano, Italy
Marco Castagna: Institute for Renewable Energy, Eurac Research, Viale Druso 1, 39100 Bolzano, Italy
Wolfram Sparber: Institute for Renewable Energy, Eurac Research, Viale Druso 1, 39100 Bolzano, Italy

Energies, 2023, vol. 16, issue 21, 1-21

Abstract: Incentive policies play a crucial role in encouraging the adoption of renewable energy sources and energy efficiency measures. This study analyzes and compares the incentives for energy transition in the South Tyrol region of Italy using a marginal abatement cost (MAC) curve constructed with an expert-based approach. The incentives for residential energy efficiency, mobility, and boiler replacement are characterized based on assumptions for costs, energy savings, and parameters. The resulting expert-based MAC curve analysis reveals boiler replacement incentives to be the most cost-effective, yielding CO 2 reductions at the lowest cost but with limited potential as the incentive is limited to apartment blocks that are not in district heating areas. Mobility incentives enabling electric vehicle adoption have the highest CO 2 reduction potential, albeit at higher costs per ton abated. Residential energy efficiency incentives fall between the two for cost-effectiveness and potential. The MAC curve approach provides a useful comparison of cost-effectiveness versus potential, guiding policy prioritization. This techno-economic assessment methodology can be applied to other regions pursuing energy transition. Overall, a balanced policy mix encompassing transport, buildings, and heating is required for comprehensive low-carbon transition.

Keywords: energy scenarios; marginal abatement cost curve; energy policy (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
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