Charles Dubouix & Anton Sviridkin Last update 25/01/2024
Abatement Cost
KEY TAKEAWAYS
- Abatement cost analysis helps companies asses the financial cost of decarbonization levers, with the objective of picking the low hanging fruits first.
- This tool is not limited to the supply and can applied to the entire business to accelerate decarbonization.
- In the supply, some levers, like modal shift and combined transport, have a negative abatement cost. This means companies can reduce emissions and save money at the same time!
- The abatement cost analysis is helpful, but it doesn't tell the whole story. It misses out on important criteria like Transit Time and Quality of Service.
Understanding the Cost of Reducing Freight Emissions
When we talk about reducing emissions in the freight industry, we often use a term called "abatement cost." This is basically how much money it costs to avoid greenhouse gases, like CO2, from being released into the air (read more about avoided emissions here). We usually talk about this cost in dollars or euro per tonne of CO2 avoided.
Here is what the abatement costs for the main decarbonization levers look like:
How Shippers Can Use Abatement Cost
Bet on the best: Think of abatement cost analysis as a tool to find the most budget-friendly ways to reduce emissions. Abatement cost is not just about transport. It lets a company look at all the different ways they can cut down on emissions in every part of their business and choose the most effective strategies for a cleaner, more sustainable future.
Unlock hidden capital: Some levers, like modal shift, can drive down emissions and actually save more money than they cost!
Limitations of Abatement Cost Analysis
While this analysis is a great tool, it's not perfect:
- Abatement cost does not consider Quality of Service and Transit time, so it must be used as a part of a broader analysis.
- Costs can change based on market trends and new technology, which can make long-term planning tricky.
- Concentrating only on strategies with negative abatement costs is a solid start; however, to attain Net-Zero by 2050, we must also consider solutions that have positive abatement costs.
🎉 Well done! You’ve mastered the Abatement Costs !!
💪 Keep on learning, with another useful environmental tool : the avoided emissions.
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