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Abstract
Countries with low marginal costs of abating carbon emissions may have high total
costs, and vice versa, for a given climate mitigation policy. This may help to explain different
countries’ policy stances on climate mitigation. We hypothesize that, under a
common percentage cut in emissions intensity relative to business as usual (BAU),
countries with higher BAU emission intensities have lower marginal abatement costs,
but total costs relative to output will be similar across countries, and under a common
carbon price, relative total costs are higher in emission-intensive countries. Using the
results of the 22nd Energy Modeling Forum (EMF-22), we estimate marginal abatement
cost curves for the US, EU, China and India, which we use to estimate marginal
and total costs of abatement under a number of policy options currently under international
debate. This analysis provides support for our hypotheses, although its reliability
is limited by the shortcomings of the EMF-22 models and the degree to which our
econometric model can adequately account for the substantial differences among them.