# Presentation: 330197

## Reducing CO2 Abatement Costs –the Importance of Learning by Doing

**Alan S. Manne, Stanford University**
**Richard G. Richels, EPRI**

**Presented at the NEMS/AEO Conference**
**Arlington, VA 22202**
**March 12, 2002**

## MERGE 4.5

- Model has nine regions (5 of which comprise Annex B and 4 of which comprise non Annex B)
- For technologies, which benefit from “learning by doing”, costs decrease by 20% for every doubling of capacity (dynamic cost component)
- One carbon-free LBD technology for electric and one for nonelectric
- There is global diffusion of learning
- There is a limit to cost reduction associated with learning by doing (static cost component)
- There is an autonomous factor, which contributes to decline in technology costs
- There are introduction constraints on new technologies and decline constraints on existing technologies

## Slide 3

## Slide 4

## Figure 1. Initial Costs for Carbon-free LBD Technologies in the Electric Sector

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 2. Electricity Generating Costs for Three Technologies in the Absence of a Carbon Constraint

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Slide 7

## Slide 8

## Figure 3. Initial Costs for Carbon-free LBD Technology in the Nonelectric Sector

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 4. Global Carbon Emissions – no carbon constraints

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 5. Global Carbon Emissions – reference case and two control scenarios  (No LBD)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 6. Global Carbon Emissions – reference case and two control scenarios  (LBDE-HC)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 7. Global Carbon Emissions – reference case and two control scenarios  (LBDE-LC)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 8. Incremental Value of Carbon Emission Rights(SCC-550)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 9. Incremental Value of Carbon Emission Rights(Kyoto+)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 10. Cumulative Discounted Global Abatement Costs for Stabilizing Concentrations at 550 ppmv – discounted at 5% from 2000-2100

**Figure 10. ****Cumulative Discounted Global Abatement Costs for Stabilizing Concentrations at 550 ppmv – ****discounted at 5% from 2000-2100**

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 11. Cumulative Discounted Abatement Costs for Kyoto+ – discounted at 5% from 2000-2100 

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 12. Global Carbon Emissions for Alternative Concentration Limits  (No LBD)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 13. Global Carbon Emissions for Alternative Concentration Limits  (LBDE-HC)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 14. Global Carbon Emissions for Alternative Stabilization Ceilings  (LBDE-LC)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure 15. Cumulative Discounted Global Abatement Costs – discounted at 5% from 2000-2100

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Some Candidates for Sensitivity Analysis

- Expansion and decline constraints
- Rate of learning
- Ultimate costs achievable with learning
- Costs of other technologies
- Environmental goals

## Figure 16. Percent of Global Electricity Generation Supplied by LBDE (with and without expansion constraints)

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure X. Global Carbon Emissions – LBDE-HC

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”

## Figure Y. Global Carbon Emissions – LBDE-LC

- Source:  A.S. Manne and R.G. Richels  “Reducing CO2 Abatement Costs – the Importance of Learning by Doing”