Potential Climate Change Mitigation Opportunities in Forestry and Agriculture for North Carolina : Potential Climate Change Mitigation Opportunities in Forestry and Agriculture for North Carolina Brian C. Murray
Director for Economic Analysis
Nicholas Institute for Environmental Policy Solutions
Duke University
Presented at
North Carolina Legislative Commission on Climate Change
Raleigh, NC
April 25, 2006
Overview : Overview Climate Change Influence on Forestry and Agriculture
Forestry and Agriculture as Mitigation “Offsets”
Economic concepts of mitigation
Costs of Mitigation
National estimates
Regional estimates
Inferences for North Carolina
Ancillary effects: co-benefits and co-costs
Conclusions
Climate change can influence forestry and agriculture in 3 ways : Climate change can influence forestry and agriculture in 3 ways Impacts (Biophysical)
Level and Variability of
Temperature
Precipitation
CO2 fertilization
Adaptation
Changes in technology and practices may be needed to adapt to changing climate
Mitigation
Raise costs of energy-intensive inputs
Opportunity for farmers/forest owners to provide mitigation offsets to other sector
Forestry and Agriculture National GHG Balance : Forestry and Agriculture National GHG Balance Sector is a net sink, nationally
Agricultural Non-CO2 Emissions by Source, 2003 (Tg CO2 Eq.) : Agricultural Non-CO2 Emissions by Source, 2003 (Tg CO2 Eq.) Table 2-2:
Policy Context: Forestry and Agriculture as Mitigation “Offsets” : Policy Context: Forestry and Agriculture as Mitigation “Offsets” GHG emissions caps usually envisioned for certain sectors – e.g., energy, transportation, manufacturing,…
But emission sources within the GHG constrained sectors could be allowed to purchase offset credits from outsiders as an alternative to continued (more expensive) reductions w/in sector
Forestry and Agriculture often viewed as outside the system and a possible source of offset credits, esp carbon sequestration
Key Economic Issues
How cost effective are they?
How to ensure that you get what you pay for?
What else do you get when you pay for the carbon – i.e., co-effects (co-benefits and co-costs)
Offset Project Implementation Issues: Getting what you pay for (an emission offset) : Offset Project Implementation Issues: Getting what you pay for (an emission offset) Permanence
Carbon sinks can be reversed through harvesting or natural disturbance (see below)
Additionality
Confining credits to reductions that would not otherwise have occurred
Requires a baseline
Leakage
Accounting for emissions that are simply relocated outside an offset project’s boundaries
Accounting adjustments can be made for all of these
Protocols are being developed internationally, nationally, regionally
Current examples of forestry and agriculture offset programs : Current examples of forestry and agriculture offset programs International: Kyoto Protocol: Projects
Clean Development Mechanism
Activities Implemented Jointly (AIJ)
Domestic
Proposed mandatory GHG caps
McCain-Lieberman – for/ag offsets (<15%)
Feinstein- unlimited role
NCEP (Bingaman-Domenici)
Voluntary:
1605(b) program
Chicago Climate Exchange
Region and state initiatives
Oregon utility sector offets
RGGI (Northeastern states)
California GHG proposals
Renewable portfolio standards (~ 24 states)
Many other initiatives being discussed
Mitigation Options in Forestry and Agriculture: Sequestration, Emissions Reduction and Biofuels : Mitigation Options in Forestry and Agriculture: Sequestration, Emissions Reduction and Biofuels Sequest-
ration Emissions
reduction Biofuels
Sequestration: Carbon fixing process in trees : Sequestration: Carbon fixing process in trees Source: US EPA http://www.epa.gov/sequestration/local_scale.html
Carbon “Saturation”: Attainment of a new equilibrium : Carbon “Saturation”: Attainment of a new equilibrium
Added complexity: Harvest cycles, storage in products and landfills, use in energy, emissions : Added complexity: Harvest cycles, storage in products and landfills, use in energy, emissions
Representative (US) Carbon Sequestration Rates and Saturation Periods : Representative (US) Carbon Sequestration Rates and Saturation Periods An automobile that is driven 12,000 miles per year and averages
25 miles per gallon emits about 4.3 tonnes of CO2 per year.
Economic Principles : Economic Principles Benefits of mitigation in forestry and agriculture
General: reduced threat of climate change
Forest/Ag offset: reduced overall cost of complying with GHG constraints
Income supplement for farmers and forest owners
Costs of mitigation
Assume that current practices are optimizing for something other than carbon (e.g., crops, timber)
New practices to optimize on carbon have opportunity costs for other outputs
Carbon supply function: How much can be sequestered at what cost per ton
Determinants of mitigation offset supply : Determinants of mitigation offset supply Practice 1 (High emitting)
Net income = $100/ac/yr
Practice 2 (Low emitting)
Net income = $80/ac/yr
Sequesters (or reduces emissions) = 1 ton CO2/yr
Will adopt Practice 2 (mitigate) if paid at least $20/ton CO2
National Forestry and Agricultural GHG Mitigation Report : National Forestry and Agricultural GHG Mitigation Report Funding Source: EPA
Objectives
Identify mitigation options in forestry and ag
Estimate potential
Biophysical
Economic
Competitive
Examine policy design issues (quantity vs price, activity targeting, per acre vs per ton)
Address key policy implementation issues
Permanence
Leakage
Assess environmental co-effects (water quality, biodiversity)
Collaborators: within RTI, Texas A&M, Ohio State, EPA
Published 12/05. Posted at http://www.epa.gov/sequestration/greenhouse_gas.html
National GHG Mitigation Totals by Key Activity: Annualized Averages, 2010–2110 : National GHG Mitigation Totals by Key Activity: Annualized Averages, 2010–2110
Potential is not uniform across regions : Potential is not uniform across regions Opportunities primarily in the eastern US
Southeast Regional Totals (MMT CO2, eq per year) : Southeast Regional Totals (MMT CO2, eq per year)
North Carolina Land Use Shares : North Carolina Land Use Shares Forestland Pastureland Cropland Developed land Federal land Other North Carolina
North Carolina Opportunities : North Carolina Opportunities Issue: Forest management can be difficult to measure, monitor, and compare to baseline
Effect of Carbon Price on Forest Management and Timber Returns: Southeastern Planted Pine : Effect of Carbon Price on Forest Management and Timber Returns: Southeastern Planted Pine Baseline More than double
Biofuels Source: Ongoing work by Bruce McCarl, Texas A&M : Biofuels Source: Ongoing work by Bruce McCarl, Texas A&M Biofuels are currently not significant economic alternative to fossil fuels without subsidy
Economic tipping points
CO2 price = $10/ton
Biodiesel from corn and soybeans starts to become economic
CO2 price = $30/ton,
Electricity generation from switchgrass, hybrid poplar, and willow (large potential)
Cellulosic ethanol
CO2 price = $100/ton
Ethanol from grains
Issue: infrastructure for using large amounts of biofuels not yet there
A Note on Manure Management : A Note on Manure Management Livestock manure management (primarily hogs) produces about 1.7 million tons/yr of CO2 eq GHGs (source: Ctr for Climate Strategies)
~ half of state’s total Ag emissions
~ 1% of all NC emission sources
Mitigation options include covered lagoons and digesters to trap methane and (possibly) generate electricity
Economic estimates of mitigation costs vary widely
Engineering studies show range of mitigation costs from +$40/ton to negative, depending on
Equipment costs
Operating costs
Recovery factors
Electricity prices
Other factors
More rigorous work needs to be done to identify situations where hog farmers could benefit from adoption
For NC, must take Smithfield/Attorney General agreement into account
GHG Mitigation and Water Quality Co-benefits : GHG Mitigation and Water Quality Co-benefits
Changes in land use and crop management to sequester carbon and reduce GHG emissions can reduce erosion, nutrient runoff, and pesticide use to the benefit of water quality
Reduced Agicultural runoff under GHG pricing : Reduced Agicultural runoff under GHG pricing Work by RTI, Texas A&M, and EPA found that thise reduced runoff led to appreciable
Improvements in water quality nationally (Pattanayak et al, 2005, Climatic Change).
Do Recent Findings Undermine the Value of Forest Carbon Sequestration? Not really : Do Recent Findings Undermine the Value of Forest Carbon Sequestration? Not really Methane emissions from plants/trees
Keppler, J.T.G. Hamilton, M.Bras, and T. Rockmann. Jan 2006.Methane emissions from terrestrial plants under aerobic conditions. Nature. 439:187-191.
Water stresses from plantations
R.B. Jackson, E.G. Jobbagy, R. Avissar, S.B. Ray,
D.J. Barrett, C.W.Cook, K.A. Farley, D.C. le Maitre,
B.A. McCarl, and B.C. Murray.Dec 2005. Trading
water for carbon with biological carbon
sequestration. Science. 310:1944-1947. Recent Concerns General findings
- Water stress issue calls for intelligent
location of plantations
- Methane emissions from plantations are
quantitatively insubstantial in terms of
global warming potential
Summary : Summary Forests and Agriculture have tremendous biophysical potential to offset GHG emissions
Cost per ton is less than many alternatives for emission reduction
Most opportunities concentrated in the South and Midwest
Best opportunties for North Carolina may be in forest management, if project monitoring can be addressed, and biofuels if infrastructure can be developed.
Environmental co-benefits of these actions can be positive, but care should be taken in choosing location of activities
Recent scientific findings do not substantially undermine value of forest C sinks as a mitigation strategy
More localized analysis is needed