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This study investigates the least-cost decarbonization pathways in the Finnish electricity generation industry in order to achieve the national carbon neutrality goal by 2035. Various abatement measures, such as downscaling production, capital investment, and increasing labor and intermediate inputs, are considered. The marginal abatement costs (MACs) of greenhouse gas emissions are estimated using the convex quantile regression method and applied to unique register-based firm-level greenhouse gas emission data merged with financial statement data. We adjust the MAC estimates for the sample selection bias caused by zero-emission firms by applying the two-stage Heckman correction. Our empirical findings reveal that the median MAC ranges from 0.1 to 3.5 euros per tonne of CO 2 equivalent. The projected economic cost of a 90% reduction in emissions is 62 million euros, while the estimated cost of achieving zero emissions is 83 million euros. • Exploring least-cost pathways for decarbonizing Finnish electricity generation. • Utilizing unique register-based firm-level greenhouse gas emission data. • Employing convex quantile regression to estimate the marginal abatement costs of emissions. • Median marginal abatement costs range from 0.1 to 3.5 euros per tonne of CO 2 equivalent. • Achieving a 90% emissions reduction costs 62 million euros, while attaining zero emissions costs 83 million euros. [ABSTRACT FROM AUTHOR]

• Forecasted costs of the Kyoto Protocol show large variance. • Empirical evidence about the economic cost of Kyoto remains scant. • Yearly GHG abatement costs estimated for 28 OECD countries in 1990–2015. • New data-driven approach based on convex quantile regression is applied. • Abatement cost per capita has been much lower than predicted in the 1990s. High economic cost of climate policy has attracted critical debate since the Kyoto Protocol. However, reliable empirical evidence of the abatement cost of green-house gases across countries remains scant. In this study we estimate the average yearly green-house gas abatement costs per capita for a panel of 28 OECD countries in years 1990–2015. The marginal abatement costs are estimated using a novel data-driven approach based on convex quantile regression. Compared to traditional frontier estimation methods, the quantile approach takes into account a broader set of abatement options and is more robust to inefficiency, noise, and heteroscedasticity in empirical data. The comparison of OECD countries shows that the actual abatement cost per capita has been very modest, much lower than predicted in the late 1990s. This result has profound policy implications, calling for more ambitious climate change mitigation strategy in the future. [ABSTRACT FROM AUTHOR]