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A wide range of Marginal Abatement Cost Curve (MACC) methods for reducing greenhouse gas (GHG) emissions has been introduced in various academic literature in the last decade to address various issues, to use different calculable logic, producing different results and implications. A detailed review has not been carried out on the application of MACC in terms of types of emissions, country/sector, and methodology used. This study is aimed at identifying, interpreting, and clarifying currently available literature on MACCs development from 2010-2020 by reviewing the previous applicability of three analytic dimensions including Greenhouse Gas (GHG) emission type, research objects, and modeling methodologies from top-down and bottom-up methods, providing researchers with information of past developments and future trends in this area. The result shows that CO2 is one of the most studied GHG emissions in calculating marginal abatement costs and some countries/regions have not received much attention from researchers in assessing emission reductions. Finally, the MACC bottom-up methodology focuses on the application of the engineering model method and the distance function method is a favorite in the application of the top-down method. Furthermore, this study also highlights possible research opportunities, which may lead to more successful and impactful results in future MACC studies.

We provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection. We then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance. Such variation, together with quantity data, allows us to estimate the demand for insurance. The same variation, together with cost data, allows us to estimate how insurers' costs vary as market participants endogenously respond to price. The slope of this estimated cost curve provides a direct test for both the existence and the nature of selection, and the combination of demand and cost curves can be used to estimate welfare.We illustrate our approach by applying it to data on employer-provided health insurance from one specific company. We detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small, in both absolute and relative terms.

We use exogenous variation in tax benefit functions to estimate firm-specific cost of debt functions that are conditional on company characteristics such as collateral, size, and book-to-market. By integrating the area between the benefit and cost functions, we estimate that the equilibrium net benefit of debt is 3.5% of asset value, resulting from an estimated gross benefit (cost) of debt equal to 10.4% (6.9%) of asset value. We find that the cost of being overlevered is asymmetrically higher than the cost of being underlevered and that expected default costs constitute only half of the total ex ante costs of debt.

Recent evidence underlines the importance of demand frictions distorting insurance choices. Heterogeneous frictions cause the willingness to pay for insurance to be biased upward (relative to value) for those purchasing insurance, but downward for those who remain uninsured. The paper integrates this finding with standard methods for evaluating welfare in insurance markets and demonstrates how welfare conclusions regarding adversely selected markets are affected. The demand frictions framework also makes qualitatively different predictions about the desirability of policies, such as insurance subsidies and mandates, commonly used to tackle adverse selection.

Manufacturing of a product such as a corrugated cardboard box (CCB) includes the extraction of a variety of raw materials in addition to supply chain efforts to get the raw materials to the industry. Conducting a LifeCycle Assessment (LCA) gives the carbon emission of each phase of the product and a quantitative estimate of the overall product carbon footprint and its effect on the environment. This gives impetus to recommendations for improving the phases of the lifecycle to minimize carbon emissions. The proposed waste management method in this paper is the “reuse” method instead of recycling or landfilling the CCB and, in so doing, focusing only on reducing carbon emissions in the manufacturing phase. The paper examines if the incremental cost of reusing the CCBs is less than the environmental and economic cost of reducing the extraction and supply chain of raw materials. This paper uses LCA to evaluate the carbon emission in each phase of the lifecycle of a typical 1 kg corrugated cardboard box in the United States. Carbon emission for the proposed “reuse” phase is also calculated, and the results are compared. This paper also explores the economic feasibility of the proposed “reuse” method that incentivizes the general population to reuse the CCBs instead of recycling or landfilling them. Economic tools such as willingness-to-pay vs. marginal cost curves and benefit-cost analyses are used to evaluate economic feasibility. The results indicate that the “reuse” method for CCBs is economically and environmentally feasible. It also supports the approach of using analytics, economics, and LCA to create a model that can be used for other products and processes as an evaluative process to determine if businesses can benefit from the reduction (or removal) of material extraction costs from the supply chain.

Methane is the second most important greenhouse gas after carbon dioxide contributing to human-made global warming. Keeping to the Paris Agreement of staying well below two degrees warming will require a concerted effort to curb methane emissions in addition to necessary decarbonization of the energy systems. The fastest way to achieve emission reductions in the 2050 timeframe is likely through implementation of various technical options. The focus of this study is to explore the technical abatement and cost pathways for reducing global methane emissions, breaking reductions down to regional and sector levels using the most recent version of IIASA's Greenhouse gas and Air pollution Interactions and Synergies (GAINS) model. The diverse human activities that contribute to methane emissions make detailed information on potential global impacts of actions at the regional and sectoral levels particularly valuable for policy-makers. With a global annual inventory for 1990-2015 as starting point for projections, we produce a baseline emission scenario to 2050 against which future technical abatement potentials and costs are assessed at a country and sector/technology level. We find it technically feasible in year 2050 to remove 54 percent of global methane emissions below baseline, however, due to locked in capital in the short run, the cumulative removal potential over the period 2020-2050 is estimated at 38 percent below baseline. This leaves 7.7 Pg methane released globally between today and 2050 that will likely be difficult to remove through technical solutions. There are extensive technical opportunities at low costs to control emissions from waste and wastewater handling and from fossil fuel production and use. A considerably more limited technical abatement potential is found for agricultural emissions, in particular from extensive livestock rearing in developing countries. This calls for widespread implementation in the 2050 timeframe of institutional and behavioural options in addition to technical solutions.

The US Pulp and Paper (P&P) industry heavily relies on fossil sources, with lime kiln operations posing a significant challenge for achieving zero on-site fossil emissions. This study assesses the greenhouse gas (GHG) reduction potential and costs associated with alternative fuels in lime kiln operations for linerboard production. Various options, including bio-based fuels including pulverized biomass, gasification of biomass, crude tall oil, bio-methanol, and traditional fuels such as fuel oil and petcoke, were analyzed through detailed process simulations and Life Cycle Assessment. Results indicate that per ton of product, 2,789 kg of CO2-eq is emitted, with 69% being biogenic CO2 and 31% fossil CO2-eq. Notably, replacing the natural gas boiler with a biomass boiler reduces Global Warming Potential (GWP) by 41%, while switching lime kiln fuel to biofuels achieves a 5.5% reduction. Combining a biomass boiler with pulverized biomass fuel use in the lime kiln yields a substantial 93.1% reduction in Scope 1 and 2 emissions, at a cost of 76/ton of CO2-eq avoided.

This study analyzes the short-run hydro generation scheduling for the wind power differences from the contracted schedule. The approach for construction of the joint short-run marginal cost curve for the hydro-wind coordinated generation is proposed and applied on the real example. This joint short-run marginal cost curve is important for its participation in the energy markets and for economic feasibility assessment of such coordination. The approach credibly describes the short-run marginal costs which this coordination bears in “real life”. The approach is based on the duality framework of a convex programming and as a novelty combines the shadow price of risk mitigation, which quantifies the hourly cost of mitigating risk, and the water shadow price, which quantifies the marginal cost of electricity production. The proposed approach is formulated as a stochastic linear program and tested on the case of the Vinodol hydropower system and the wind farm Vrataruša in Croatia. The result of the case study is a family of 24 joint short-run marginal cost curves. The proposed method is expected to be of great interest to investors as it enables risk mitigation for investors with diverse risk preferences, from risk-averse to risk-seeking.

We analyze the hedging decisions of firms, within an equilibrium setting that allows us to examine how a firm's hedging choice depends on the hedging choices of its competitors. Within this equilibrium some firms hedge while others do not, even though all firms are ex ante identical. The fraction of firms that hedge depends on industry characteristics, such as the number of firms in the industry, the elasticity of demand, and the convexity of production costs. Consistent with prior empirical findings, the model predicts that there is more heterogeneity in the decision to hedge in the most competitive industries.

In the rapidly growing economies of Southeast Asia, energy consumption and energy costs in buildings continue to increase. Over the past decade, energy consumption from the commercial building sector in Thailand has increased at an average of 4% per annum and currently represents over 30% of total electricity consumption, second only to the industrial sector. Buildings that exist today will continue to represent most of both energy and greenhouse gas (GHG) emissions from the built environment, with newly constructed buildings representing only a small additional portion. This paper analyzes the environmental, technical, and financial characteristics of energy efficiency retrofit activities in commercial buildings in Thailand through detailed case studies of forty-two projects undertaken over the past 8 years. Our findings suggest that retrofits provide significant opportunities to reduce energy use, energy costs, and GHG emissions while also validating the economic feasibility of investments into such retrofit activities. Through this detailed analysis of past retrofit projects in Thailand, we found that the marginal abatement costs (MAC) relating to the key energy conservation measures (ECM) implemented within these retrofit projects all have negative costs. However, although these findings demonstrate positive economics and should be sufficient to instigate widespread adoption, in reality, this is not taking place. It is evident that greater public policy and leadership are needed to stimulate growth in the building retrofit sector to take advantage of the opportunities and benefits that building retrofits offer.