However, when decomposing regional carbon reduction targets, fairness. In response to climate change, China has proposed a relative emission reduction target of 40-45% reduction in CO, emission intensity by 2020.
Source: Smokers, Buck, and van Valkengoed (2009) curve is constructed by.
#Marginal cost of a big mac mac
2.10 Illustration of a MAC curve and its uses in policy-making. These measures are at the left-most part of the MAC curve, as the Fig.
#Marginal cost of a big mac full
In addition, these authors note the lack of full disclosure of the assumptions and the non-consideration of interdependencies and “intersectoral, intertemporal, behavioral, macroeconomic, and international interactions” which can lead to problems defining the emissions baseline especially in a time horizon of 20 years or even more. Another problem has to do with hidden costs, including transaction and monitoring costs. The general shortcomings presented in their work include the focus on emission reduction without considering ancillary benefits such as health improvement which can not be easily monetized, and a static representation of costs which fails to consider path dependency. Obviously, the easily-digestible form of the graphic MACC led to these problems being overlooked, placing a strong confidence in the results. Furthermore, they do change massively over time as innovation kicks in with more cost-effective measures (FOEI, 2008).Įkins, Kesicki, and Smith (2011) discuss the various caveats and methodological problems associated with the MAC curves. For example, a global emissions reduction of 26 Gtons of CO2-eq per year would stabilize greenhouse gas concentrations at 450 ppm of CO2-eq, and that reduction would need all the abatement measures up to a cost of €40 per ton of CO2eq.Īnd, therefore, differ among sectors and countries. It shows the annual abatement needed to achieve stable atmospheric greenhouse gas concentrations of 500 ppm (parts per million), 450 and 400 ppm of CO2-equivalents. The MAC curves have been popularized by the consulting firm McKinsey & Company, which used them on a global and country-wide scale to target areas for carbon abatement.įigure 2.9 presents an example of a marginal abatement cost (MAC) curve published in a global study by McKinsey in 2007 (Enkvist, Naucle´r, & Rosander, 2007). Note that the word 'marginal' denotes that all available reduction measures are mutually exclusive. 2.8 Schematic example of a marginal abatement cost curve The height of each bar represents the average marginal cost of avoiding a ton of CO2-eq given that all measures on its left are already applied and the width represents the potential of thatįig. A MAC curve is a graph that shows the cost-effectiveness index defined above of all the available measures (each measure represented as a bar) that are ordered in a function of increasing abatement costs, see Fig.