Resolving the effects of heterogeneity and technological progress on carbon mitigation costs

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1605319Williams, EricUnderstanding the cost of mitigating carbon emissions is critical in planning societal responses to climate change. Carbon interventions have broad sustainability benefits since energy-related environmental emissions and resource challenges are also mitigated. Market heterogeneity and technological progress are important but poorly understood factors in mitigation cost. In many energy system analyses, all adopters of a technology are considered the same as an average one. However, there is often large heterogeneity in benefits to different adopters. If mitigation efforts are focused on the most effective sub-groups, mitigation costs can be significantly lower. In additional, if technological progress is rapid, adoption by favorable subgroups can stimulate cost reductions, making the technology more attractive to other consumers. In this research, a new Marginal Abatement Cost Curve (MACC) will be developed for the United States that accounts for heterogeneity and technological progress. A Marginal Abatement Cost Curve orders interventions from least to highest mitigation cost combined with the total mitigation potential for each technology assuming wide adoption. Marginal Abatement Costs Curves provide insight into prioritization and relative potential of mitigation options and are widely used in policy discourses at national, state, and city levels. The new MACC curve covers technological interventions from residential and commercial buildings, transportation and renewable energy sectors. Heterogeneities in geography, behavior and technology stock will be are analyzed. Examples of geographical heterogeneity include availability of wind resources and climate-related variability of heating and cooling demand in buildings. Behavioral heterogeneity includes thermostat settings and usage patterns of appliances. Stock heterogeneity refers to variation in the efficiency of current equipment or infrastructure. The complexity of different heterogeneities will be managed through cluster analysis to identify adopter subgroups with similar characteristics. Cost reductions will be predicted with retrospective forecasting approaches, mainly experience curves. Use of modern data analysis techniques such as cluster analysis enables the integration of several federal micro-data sets into technology adopter subgroups with distinct mitigation costs. Accounting for the sequencing of adoption in heterogeneous markets combined with technological progress leads to new insights into potential reductions in mitigation costs. Accounting for heterogeneity and technological progress is important beyond marginal abatement curves, as these factors also affect results of integrated energy-economic models such as the National Energy Modeling System (NEMS). The cost of mitigating carbon is a critical sustainability challenge. Despite the importance of this question, treatment of abatement costs routinely neglect important heterogeneities. Combining heterogeneity with the potential of technological progress to reduce costs for later adopters should reveal significant opportunities to lower mitigation costs, which can directly inform US climate and energy policies. To engage relevant communities, two workshops will be organized. The first workshop will be held adjacent to the annual conference of the U.S. Association for Energy Economics, and will engage academia, consulting firms and utilities. The second workshop will be held in Washington D.C. for policy decision makers. The dataset that describes heterogeneities will be of general interest to the energy modeling community and will be distributed freely via the Internet. A high school cohort from underrepresented groups will be engaged in a summer camp covering energy issues and careers. Broader groups of students and faculty will be reached through development of online modules and dissemination through the Center for Sustainable Engineering.