Competitiveness of Terrestrial Greenhouse Gas Offsets: Are They a Bridge to the Future? Ron Sands Joint Global Change Research Institute Battelle – PNNL – University of Maryland Bruce McCarl Texas A&M University 10 th AIM International Workshop Tsukuba, Japan 10-12 March 2005
Introduction � Can agriculture and forestry provide a short term bridge to a longer term reduced-emissions future? � How significant a contribution could agriculture and forestry make relative to non-agricultural (e.g., energy and industrial) mitigation possibilities? 2
Methodology for Assessment � Models � FASOM-GHG � Second Generation Model � FASOM-GHG coverage � FASOM-GHG simulates production of 22 traditional crops, 3 biofuel crops, and 29 animal products in 63 U.S. regions, plus 8 forest commodities in a 100 year simulation � Prospects for global analysis � Capabilities of FASOM-GHG are not yet available for the globe � Modeling activities in Europe and Asia 3
FASOM-GHG Overview � Intertemporal, mathematical programming model depicting land transfers and other resource allocations among agricultural and forestry sectors in the U.S. � 10-year time steps through 2100 � Endogenous variables � Commodity and factor prices � Production, consumption, export, and import quantities � Management strategy � Resource use � Economic welfare � Greenhouse gas accounting � Carbon dioxide emissions and absorption � Methane emissions � Nitrous oxide emissions 4
FASOM-GHG Activities GHG affected Mitigation strategy Strategy Nature CO 2 CH 4 N 2 O Biofuel production Offset X X X Crop mix alteration Emission, Sequestration X X Rice acreage reduction Emission X Crop fertilizer rate reduction Emission X X Other crop input alteration Emission X Crop tillage alteration Sequestration X Grassland conversion Sequestration X Irrigated /dry land conversion Emission X X Livestock management Emission X Livestock herd size alteration Emission X X Livestock system change Emission X X Liquid manure management Emission X X 5
Concepts for Assessing Mitigation Potential Example: U.S. ag soil potential: Example: U.S. ag soil potential: 500 500 C price ($/tCeq) C price ($/tCeq) Competitive Competitive Economic Economic Technical Technical 400 400 Potential Potential Potential Potential Potential Potential 300 300 200 200 100 100 0 0 0 0 20 20 40 40 60 60 80 80 100 100 120 120 140 140 160 160 Soil carbon sequestration (mmtce) Soil carbon sequestration (mmtce) 6
Greenhouse Gas Mitigation Options (SGM with FASOM-GHG) � Terrestrial � Soil sequestration � Forest management � Afforestation � Biofuel offsets � Crop energy management � Non-CO 2 greenhouse gases � Exogenous marginal abatement cost curves � Developed by U.S. EPA for Energy Modeling Forum � Covers agriculture and industry � Energy efficiency and fuel switching � CO 2 capture and storage (CCS) 7
Second Generation Model � SGM characteristics � Computable general equilibrium model of United States and other world regions � Five-year time steps from 1990 through 2050 � Capital stocks are industry specific with a new vintage for each model time step � CO 2 capture and storage with electric power � Engineering cost model for capture process from David and Herzog, 2000, “The Cost of Carbon Capture,” Proceedings of the Fifth International Conference on Greenhouse Gas Control Technologies � Constant cost of carbon disposal ($40 per tC) 8
Synchronizing the Models � Results from both FASOM-GHG and SGM are path dependent � Level of greenhouse gas mitigation depends on current carbon price and time path of previous carbon prices (FASOM-GHG also depends on future prices) � Consequence of dynamic structures in FASOM-GHG and SGM � Same time path of carbon prices is applied to FASOM-GHG and SGM for consistency � Options for carbon price paths � Hotelling � Constant carbon (dioxide) prices � Following results at $5, $15, $30, $50 per t of CO 2 -eq � Corresponds to prices of $18.33, $55.00, $110.00, $183.33 per t of carbon equivalent � Carbon dioxide prices start in 2010 and held constant thereafter 9
FASOM-GHG Results � Results reported as cumulative amount of CO 2 -eq sequestered or emissions avoided over time � More accurate picture of dynamics � Soil sequestration saturates after three decades � Quantity of sequestered carbon may decline in later decades, especially when trees are harvested � Charts shown for $15 and $30 per t CO 2 -eq for 2010 through 2100 10
FASOM-GHG Results ($15 per t CO 2 -eq) 90,000 80,000 70,000 Mt CO 2 -eq (cumulative) 60,000 biomass offsets 50,000 crop energy management forest management afforestation 40,000 soil sequestration 30,000 20,000 10,000 0 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 11
FASOM-GHG Results ($30 per t CO 2 -eq) 90,000 80,000 70,000 Mt CO 2 -eq (cumulative) 60,000 biomass offsets 50,000 crop energy management forest management afforestation 40,000 soil sequestration 30,000 20,000 10,000 0 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 12
Combined Results � FASOM-GHG output converted from cumulative quantities to annual increments � Mitigation potential is summed every five years across FASOM-GHG and SGM � Charts shown for $15 and $30 per t CO 2 -eq for 2010 through 2050 � Annual increments for soil sequestration and afforestation can be negative in later decades 13
Combined Results ($15 per t CO 2 -eq) 4,000 Components of U.S. Emissions Reductions 3,500 at $15 per t CO 2 -eq 3,000 2,500 FASOM forest mgmt. FASOM afforestation 2,000 FASOM soil Mt CO 2 -eq FASOM biofuel CCS 1,500 F-gases nitrous oxide 1,000 methane energy system CO2 500 0 2010 2020 2030 2040 2050 -500 -1,000 14
Combined Results ($30 per t CO 2 -eq) 4,000 Components of U.S. Emissions Reductions 3,500 at $30 per t CO 2 eq 3,000 2,500 FASOM forest mgmt. FASOM afforestation 2,000 FASOM soil Mt CO 2 -eq FASOM biofuel CCS 1,500 F-gases nitrous oxide 1,000 methane energy system CO2 500 0 2010 2020 2030 2040 2050 -500 -1,000 15
Strategic Comparison (1) � Total mitigation potential across time and carbon Total Mitigation Potential prices � Mitigation potential increases 6,000 with CO 2 price, as expected 5,000 � Mitigation potential grows 4,000 Mt CO 2 -eq slowly over time at low CO 2 3,000 prices $50 2,000 $30 � Masks underlying trends in $15 1,000 individual options $5 0 � Terrestrial sequestration 2010 2020 2030 2040 2050 contribution decreases rapidly after initial decades 16
Strategic Comparison (2) � Contribution of terrestrial options Terrestrial Fraction of Mitigation � Large percentage of total in first three decades, even at 60% $50 $30 high carbon prices 50% $15 $5 � Biofuel offsets provide most 40% of terrestrial contribution in 30% later decades, but only at higher carbon prices 20% 10% 0% 2010 2020 2030 2040 2050 17
Conclusions � Terrestrial sequestration options are available in the early years of a carbon policy � Buy time to develop energy system alternatives that are capital intensive � However, terrestrial sequestration eventually saturates � Biofuels play an increasing role over time and at higher carbon prices � Non-CO 2 greenhouse gas mitigation options are also available early relative to options in the energy system � What is needed for global analysis? � Development of FASOM-GHG for regions other that U.S. � Assessment of CO 2 capture and storage capabilities globally � Revisit non-CO 2 marginal abatement costs curves, especially in developing countries 18
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