The marginal cost of net-zero emissions under the Paris Agreement

Australia has ratified the Paris Agreement, which aims to ‘strengthen the global response to the threat of climate change’ by limiting the increase in the global average temperature to ‘well below 2° Celsius’ (C) above pre-industrial levels, and pursue efforts to limit the global temperature increase to 1.5°C. To achieve this outcome, the Agreement sets a goal of net zero emissions by the second half of the century.

Commitments to reduce GHG emissions require policymakers and companies to identify cost-efficient means to meet their obligations. Marginal abatement cost (MAC) curves are frequently used to illustrate the economics associated with climate