Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/340016 
Year of Publication: 
2026
Series/Report no.: 
ZEW Discussion Papers No. 26-011
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
Companies across industries seek to assess the costs of complying with environmental regulations and meeting voluntary emission targets. This paper develops a carbon abatement cost model for firms operating a portfolio of assets with differing cost or load profiles. The resulting abatement cost curves serve as a decision tool for configuring individual assets to achieve firm-wide emission reductions at least cost. We apply our model to urban bus fleets regulated under the California Cap-and-Trade Program. We find that a carbon price of $35 per ton of CO2e (2024 average) incentivizes firms to configure their fleets such that batteryelectric drivetrains constitute 70% of usable installed capacity and 92% of annual demand, while diesel drivetrains serve peak loads. Since the resulting emissions are fairly inelastic to the carbon price, we conclude that the life-cycle cost per mile would increase substantially if deep decarbonization were to be induced entirely by higher carbon prices.
Subjects: 
life-cycle costing
capacity investments
abatement cost curves
carbon emissions
transport decarbonization
JEL: 
M41
M48
Q54
Q56
Document Type: 
Working Paper

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