Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312180 
Year of Publication: 
2024
Series/Report no.: 
ZEW Discussion Papers No. 24-061
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Companies in various industries are under growing pressure to assess the costs of decarbonizing their operations. This paper develops a generic abatement cost concept to identify the cost-efficient combination of technological and operational changes firms would need to implement to drastically reduce greenhouse gas emissions from current production processes. The abatement cost curves resulting from our framework further serve as a decision tool for managers to determine the optimal abatement levels in the presence of environmental regulations, such as carbon pricing. We calibrate our model in the context of uropean cement producers that must obtain emission permits under the European Emission Trading System (EU ETS). We find that a price of €85 per ton of carbon dioxide (CO2), as observed on average in 2023 under the EU ETS, incentivizes firms to reduce their annual direct emissions by about one-third relative to the status quo. Yet, this willingness to abate emissions increases sharply if carbon prices were to rise above the €100 per ton of CO2 benchmark.
Subjects: 
marginal abatement cost
carbon emissions
industrial decarbonization
cement production
JEL: 
M1
O33
Q42
Q52
Q54
Q55
Q58
Document Type: 
Working Paper

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