Intertemporal issues and marginal abatement costs in the UK transport sector

Abstract An energy system model, UK MARKAL, is combined with decomposition analysis and sensitivity analysis to derive mitigation costs and emissions reduction potentials in the UK transport sector. The paper tests the robustness of a marginal abatement cost curve for the year 2030 for two parameters: path dependency and discount rate. Path dependency is found to be a significant, yet not substantial, influencing factor on the shape and the structure of the marginal abatement cost curve. Doubling the technology-specific hurdle rates shows that abatement costs increase significantly. The results suggest that policy makers should be aware of the underlying carbon tax pathway and whether results are based on society’s view or a private perspective.