Use of McKinsey abatement cost curves for climate economics modeling

The authors adapt McKinsey's global abatement cost data for use in the CRED model by aggregating 21 regions into nine and 11 sectors into two (land use and industry). To resolve the theoretical conflict of 'negative-cost' abatements—where energy savings outweigh investment—the authors assign these measures a near-zero but positive cost. The resulting estimates suggest that emission reductions may be cheaper than those projected by top-down integrated assessment models like RICE or EMF-22, while remaining broadly comparable to the MIT EPPA model's positive-cost estimates.

• McKinsey's 2009 'Pathways to a Low-Carbon Economy' report suggests significant abatement potential at low costs, estimating that by 2030, 38 Gt of CO2e could be avoided at a cost of €60 per ton or less, with an average cost of €4 per ton.
• The authors identify a conflict between McKinsey's 'negative-cost' abatement opportunities and economic theory, noting that if such net economic benefits existed, they should have already been invested in. To maintain model realism and avoid a surge of artificial capital, the authors assign a near-zero but positive cost to these measures.
• The CRED model's abatement cost estimates are broadly similar to the positive-cost portion of the MIT EPPA model, particularly for developed countries, though CRED identifies more opportunities in developing countries like China and Africa.
• A comparison of 2030 abatement costs as a percentage of GDP under the 'Copenhagen Convergence' scenario shows that the CRED model projects the lowest costs, followed by the RICE model, with the EMF-22 estimates being the highest.
• The authors conclude that bottom-up studies, such as those by McKinsey, generally project lower abatement costs than top-down integrated assessment models, even when negative-cost opportunities are excluded.

APA

Ackerman, F., & Bueno, R. (2011). Use of McKinsey abatement cost curves for climate economics modeling. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-workingpaperus-1102.pdf

Chicago

Ackerman, Frank, and Ramón Bueno. Use of McKinsey abatement cost curves for climate economics modeling. Stockholm Environment Institute, 2011. https://www.sei.org/mediamanager/documents/Publications/Climate/sei-workingpaperus-1102.pdf.

Wikipedia

{{cite report |last1=Ackerman |first1=Frank |last2=Bueno |first2=Ramón |title=Use of McKinsey abatement cost curves for climate economics modeling |publisher=Stockholm Environment Institute |date=25 January 2011 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/sei-workingpaperus-1102.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ackerman2011use, author = {Ackerman, Frank and Bueno, Ramón}, title = {{Use of McKinsey abatement cost curves for climate economics modeling}}, institution = {Stockholm Environment Institute}, year = {2011}, month = jan, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/sei-workingpaperus-1102.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }