Greenhouse gas abatement costs and market based instruments

For policy intervention to be effective, we need to know where such intervention is likely to have most effect. There is literature emerging on this from a variety of sources. This paper synthesises some of this information as well as looking at the literature on policy interaction in seeking the least cost abatement options. The first section assesses the latest European Commission report which examines a least-cost route for the EU Member States, and then examines the latest IPCC Mitigation report and work done by Ellerman and Decaux (1998) in examining marginal abatement curves. The abatement cost analyses that have been undertaken do provide broad guidelines as to where the least cost (more economically efficient) opportunities for abatement lie, and this is a crucial step in ensuring that economic resources are not wasted. Interestingly, abatement of the non CO2 gasses, notably methane and nitrous oxide, emerge in many studies as relatively low cost options.