Extending the limits of the abatement cost

The paper examines the relevant cost benefit framework for state agencies investigating the potential of local projects to mitigate climate change. While these projects are typically limited in time and space, continuation paths need to be introduced to capture the benefits provided by the project. We propose a new metric that incorporates into the analytical framework the dynamic interactions between the project and its continuation. The new metric is a non trivial extension of the standard cost of abatement, and determines when to launch a project. We further analyse how the metric should be adjusted to compare two competing projects. Two illustrations make clear the novelty of our approach: the choice of the optimal mix of technologies for the electricity sector and the comparison between competing green technologies for mobility.