Assessing marginal abatement costs (MAC) of emissions can help a firm to mitigate emissions costeffectively. This study proposes a method to evaluate MAC, which combines strengths of bottom-up engineering methods and top-down economy-wide methods. A parametric directional distance function is employed to estimate MAC from economic perspective, and the abatement level is further incorporated to generate increasing curves, which is similar to the outcomes derived from engineering perspective. This method takes into consideration whether abatement level exceeds abatement potential with current production technologies so as to provide a more realistic estimation of MAC curve. The technique is illustrated through estimating carbon emission marginal abatement cost of petroleum processing and coking industry.
Keywords abatement potential, abatement target, carbon emissions, directional distance function, marginal abatement cost, shadow price