An Easy and Transparent Way to Build
a Marginal Abatement Costs Curve
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Why MACTool?
Countries conducting low carbon
studies/implementing Cap-and-Trade
systems to achieve voluntary emission
reductions. There is need to:
Achieve the targets efficiently
 Choose among many mitigation options
 Know the potential results
 Know the potential costs

Key Advantages of MACTool:



Considers the break-even carbon price
Discount rate customizable by technology
Visual display of the results easy to share
with stakeholders
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How it Works
Marginal Abatement Cost (MAC):
Net Present Value of Costs and Benefits (unique
IRR for each option) associated with a Mitigation
Option, divided by the number of Tons of CO2
abated during the period considered
Input Data
Calculate
Marginal
Abatement Costs
Rank Marginal
Abatement Costs
MAC Curve &
Great Graphics
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
$20 0
$40
$60
$80
$100
Reforestation
Net Cost
Costs > Benefits
Net Benefit
Costs < Benefits
Marginal Abatement Cost ($/tCO2e)
Marginal Abatement Cost Curve
2,000
4,000
6,000
8,000
$42/tCO2
10,000
12,000
Abatement Potential = 916 MtCO2
during the period considered (2010-2030)
Cumulative Mitigation Potential of Low Carbon Options (MtCO2e)
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PUBLIC SECTOR
The Break-Even Carbon Price
KEY QUESTIONS
EXAMPLE MITIGATION OPTION:
COGENERATION FROM SUGARCANE
Is there an option for a low-carbon scenario?
 YES: Extracting condensing turbine, 90 bars
What is the mitigation potential ?
 158 MtCO2e (7.5MtCO2/year)
Does it make sense economically from a public
planning perspective ?
 YES: Marginal Abat. Cost = - $ 105 /tCO2\
(8% social discount rate)
PRIVATE SECTOR
Would it happen spontaneously ?
Break-Even Carbon Price = +$8/tCO2
 NO: Private Sector EXPECTED IRR is 18% > 8%
Incentive required = + $ 8 /tCO2
Results |Break-Even Carbon Price
Break-Even Private Approach :
Expected IRRs are higher than 8%
700
MAC Social Approach : discount
rate 8%
500
60
Reforestation
BRT
renewable charcoal
Scale
Changes!
rail + water vs. roads
300
40
new refineries
33
existing
refineries
residential solar heater
20
100
avoided deforestation + livestock
0
0
1718
16
-100
14
windpower
13
-300
NG vs. fuels
furnace heat rec.
10
9
8
7
6
-60
TL Brazil-Venez.
recycling
5
Refrigerators
combustion opt.
electric motors
-80
comm. lighting
ind. solar thermal applications
4
-100
3
2
-120
1
industrial lighting
heat recovery sys
steam rec. system
sugarcane cogen.
res. lighting
-140
2930
ethanol exports
bicycle lanes
landfill CH4 destruction
6000
6000
20 21
no tillage cropping
energy efficiency
12
11
-40
4000
4000
optimizing traffic
gas to liquid (GTL)
15
-20
19
2000
2000
ethanol displacing domestic gasoline
22
8000
8000
23
32
24
31
28
27
2526
10000
10000
new ind.
processes
biomass
vs. other
fuels
12000
12000
Domestic
Supply
760 MtCO2
$40
0
$60
Gas to Liquid
Landfill Methane Destruction
$80
Urban Traffic Optimization
$100
Natural Gas displacing Other Fuels
$120
Scaling Up No-Tilling
$140
Bus Rapid Transit (BRT)
$160
Other Energy Efficiency Measures
CO2
Price
$180
Furnace Heat Recovery Systems
Domestic
Supply
1878 MtCO2
Renewable vs. Non Renew. Charcoal
$200
New Industrial Processes
Results| Local Cap and Trade
$20
$0
-$20
-$40
-$60
-$80
0
500
1,000
Domestic
Domestic Market
Market Supply
Supply
1,500
2,000
2,500
3,000
The MACTool explores the order of
magnitude of the Supply Side of a Domestic
Carbon Market, testing different price
configurations
-$100
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INVESTMENT
NEEDED
$Million
252
5,957
8,794
972
8,074
4,088
827
$ of Investment/tCO2
2,500
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Bus Rapid Transit (BRT)
New Industrial Processes
Natural Gas displacing Other Fuels
Other Energy Efficiency Measures
Gas to Liquid
Furnace Heat Recovery Systems
Urban Traffic Optimization
$250
Bus Rapid
Transit (BRT)
2,000
New
Industrial
Processes
1,500
Gas to Liquid
1,000
Other EEy
Measures
Renewable vs. Non Renew. Charcoal
$150
Natural Gas
displacing
Other Fuels
500
Furnace Heat
Recovery
Systems
$100
Landfill Methane Destruction
The MACTool also estimates
the volume of investment
$200different
needed to achieve
sets of mitigation targets
Urban Traffic
Optimization
0
Renewable
vs. Non
Renew.
Charcoal
Scaling Up No-Tilling
$50
Landfill
Methane
Destruction
Scaling Up
No-Tilling
Results| Investment Intensity
$0
3,000
6,986 37,995 23,290
TO GET MODEL & TRAINING:
Pedzi Makumbe: [email protected]
SUPPORT | User guides available in software
& from ESMAP Staff
FOR ADDITIONAL SUPPORT, CONTACT:
PEDZI MAKUMBE, ENERGY SPECIALIST
202.473.9371
[email protected]
Thank You.
The World Bank | 1818 H Street, NW | Washington DC, USA
www.esmap.com | [email protected]
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