Abatement costs in response to the Swedish charge on nitrogen oxide emissions

This paper estimates abatement cost functions for reduction of nitrogen oxide emissions from energy production in three industrial sectors. The analysis uses a unique plant-level data set comprising 162 abatement measures implemented by 114 combustion plants and followed annually over the period 1990-96. The analyzed plants became subject to an environmental charge on nitrogen oxide emissions in 1992. The empirical findings suggest that extensive emission reductions have taken place at a zero or very low cost and that effects of learning and technological development in abatement has been present during the analyzed period. The findings support the hypothesis that “low-hanging fruit” is abundant in NOx abatement, however, give little support for the presence of true “win-win” opportunities.