Given the combined limitations of carbon peaking and carbon neutrality goals, the economic cost of industrial emission reduction in China has become increasingly prominent and regionally differentiated. This study evaluates the shadow prices of CO2 within the Chinese sector and examines the spatiotemporal evolution of carbon abatement costs across provinces, as well as the underlying influencing mechanisms. To capture the evolution of marginal abatement costs (MAC), we use two non-parametric frameworks based on provincial panel data from 2010 to 2022: slack-based measure (SBM), and the directional distance function (DDF) that accounts for unwanted outcomes. In addition, a fixed effects model with regional and temporal effects was constructed to determine the key determinants of marginal carbon reduction costs. Empirical evidence suggests that: (1) From 2010 to 2022, China’s industrial carbon abatement marginal cost has clearly increased, indicating that emission reduction has gradually shifted from a low-cost stage driven by efficiency improvement to a high-cost stage relying on structural adjustment and advanced technologies. (2) Carbon abatement costs exhibit significant provincial heterogeneity by a small number of high-cost provinces (mainly in developed regions) and a majority of low-cost regions, reflecting differences in industrial structure and technological constraints. (3) The industrial carbon emission reduction cost curves in some provinces of China have obvious similar evolution paths, and some areas also show a lagging phenomenon. (4) Carbon emission intensity is the dominant factor influencing abatement costs and presents a significant U-shaped relationship, while urbanization increases cost pressure and trade openness helps reduce abatement costs through structural optimization and technology spillovers.
Zou et al. (Fri,) studied this question.