CO₂ abatement costs: A cost-efficient transformation towards climate neutrality is possible
The discussion about the affordability of the energy transition has intensified significantly in recent years. While climate protection and security of supply continue to be central pillars of the transformation, the question of how these goals can be achieved cost-effectively has come to the fore. Our article in the “et” – Energiewirtschaftliche Tagesfragen provides a basis for discussion and shows that a large share of emissions reductions can be achieved with measures that are cost‑effective in this sense.
This article analyses the CO₂ abatement cost curve for Germany (see Fig. 1) and discusses its implications for the transformation. The curve shows 94 reduction measures in the industry, transport, building heating and energy sectors, covering 93 per cent of German CO₂ emissions in 2019. The target year 2040 was chosen, as most technological options are expected to be available from today’s perspective. The Marginal Abatement Cost Curve (MACC) makes it possible to compare these measures based on their reduction potential and their cost per tonne of CO₂ avoided.
If the year 2040 is considered, around 80 percent of the CO₂ potential under consideration can be tapped without or with moderate additional costs. Almost half of the potential even has negative reduction costs. Electrification plays a central role in this. Almost half of the total reduction potential is addressed by electrical technologies, such as heat pumps, electromobility or electric process heat.
At the same time, the analysis shows that electrification alone is not enough to reduce all emissions. In the basic materials industry as well as in aviation and shipping, residual emissions remain in the long term that can only be eliminated with the help of complementary energy carriers such as biomass, hydrogen and synfuels or CO₂ capture. These solutions are still associated with high costs and uncertainties today. Their widespread use therefore requires not only technological progress, but also the development of an appropriate infrastructure and reliable regulatory frameworks.
Another key finding concerns the effect of the CO₂ price. About two-thirds of the potential considered is below a CO₂ price of 140 euros per tonne and would therefore be cheaper to implement than the purchase of further certificates. However, when deciding which measures to invest in, existing life cycles of existing plants must be taken into account in order not to devalue the existing capital stock.
The full article can be read in the 01-02/2026 issue of the “et”. The analysis and the article stemmed from a commission by RWE to model a cross-sectoral and cross-border CO₂ abatement cost curve.
Further information:
- Cross-sector and cross-country analyses of greenhouse gas abatement costs
- CO₂-Verminderungskosten für die bayerische Industrie im Trendszenario
- Dynamis – Dynamische und intersektorale Maßnahmenbewertung zur Dekarbonisierung
- CO₂-Verminderungskosten von Gasen – Entwicklung statischer CO₂-Verminderungskostenkurven
