This paper estimates the Marginal Abatement Cost Curve (MACC) of CO2 emissions in China using provincial panel data from 2001 to 2010. The authors employ a parameterized directional output distance function to estimate the provincial marginal abatement cost (MAC) of CO2 emissions. Four types of model specifications are applied to fit the MAC-carbon intensity pairs, and the optimal specification is identified econometrically. The results show that China would incur a 559-623 Yuan/ton (roughly 51-57 percent) increase in marginal abatement cost to achieve a 40-45 percent reduction in carbon intensity compared to its 2005 level. The paper also discusses the advantages and disadvantages of different approaches to estimating MACC, including expert-based, model-derived, and supply-side/production-based methods. The empirical results provide valuable insights for policy makers in designing cost-effective strategies to reduce CO2 emissions in China.This paper estimates the Marginal Abatement Cost Curve (MACC) of CO2 emissions in China using provincial panel data from 2001 to 2010. The authors employ a parameterized directional output distance function to estimate the provincial marginal abatement cost (MAC) of CO2 emissions. Four types of model specifications are applied to fit the MAC-carbon intensity pairs, and the optimal specification is identified econometrically. The results show that China would incur a 559-623 Yuan/ton (roughly 51-57 percent) increase in marginal abatement cost to achieve a 40-45 percent reduction in carbon intensity compared to its 2005 level. The paper also discusses the advantages and disadvantages of different approaches to estimating MACC, including expert-based, model-derived, and supply-side/production-based methods. The empirical results provide valuable insights for policy makers in designing cost-effective strategies to reduce CO2 emissions in China.