Upload
andres-goodkin
View
220
Download
0
Tags:
Embed Size (px)
Citation preview
Climate Change Mitigation
Bruce A. McCarl
Department of Agricultural Economics
Texas A&M University
Discussion Outline
Why Might We Mitigate?
Brief History of the UNFCCC
The KYOTO Protocol and its Mechanisms
U.S. Cost of Compliance with KYOTO protocol
Potential Sectoral GHG Emission Mitigation Strategies
Policies, Measures, and Instruments
Introduction to GHG Mitigation Economics
Mitigation Assessment
Why Might We Mitigate?
Greenhouse gas forcing is causing climate change
International agreements under UNFCCC - Kyoto Protocol
International pressures for emission reduction
Domestic policies at national or state level
Industry planning under uncertainty
Need for cheap emission offsets
Congruence of programs with other agriculturally related
societal desires such as farm income support and water
quality protection
Development of another market for farm products
Greenhouse gas forcing is causing climate change
Basic argument is that GHG emissions are increasing
earth’s heat trapping and climate is warming
See climate change effects notes for discussion
Brief History of the International Agreements on Mitigation
UNFCCC : United Nations Framework Convention on Climate Change
Adopted on May 9, 1992 and ratified by 176 governments
worldwide as of October 1998
Developed plans for responding to climate change
“... to achieve ... stabilization of greenhouse gas
concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the
climate system” (p.9).
Established to negotiate net GHGE reduction
Under it’s auspices, the KYOTO Protocol was adopted in
1997.
The KYOTO Protocol
The first major international agreement towards GHGE
reduction
Industrialized countries agreed to reduce emissions of six
greenhouse gases baskets [CO2, CH4, N2O, HFCs, CFs, SF6]
to 5-8% below 1990 levels between 2008 - 2012.
GHGs are compared to each other using global warming
potential (GWP) coefficients
Treatment of emissions of GHGs from land-use change
Approval of offsets through enhancement of sinks
Authorization of mechanisms to reduce the cost of meeting
the target
The KYOTO Protocol – Mechanisms
Mechanisms to reduce the cost of meeting the above target
International Emissions Trading (Article 17)
Allows the trading of assigned amounts within or
among industrialized countries to meet quantified emission limitation
or reduction commitments.
Clean Development Mechanism (CDM) (Article 12)
Allows industrialized countries to finance emission
reductions in developing countries to help in sustainable
development and receive emission credits for doing so.
Joint Implementation (JI) (Article 6)
Allows Annex I transferring/acquiring emission
reductions resulting from activities aiming to reduce
anthropogenic emissions by sources or enhance
anthropogenic removals by sinks.
The KYOTO Protocol – Mechanisms
Joint Action or Bubbles (Article 4)
Agreement among regional groups to achieve their reduction
targets jointly provided that their combine aggregated anthropogenic
emissions of GHGs do not exceed their quantified emission limitation
and reduction commitments.
Source: Kyoto Protocol at http://www.sdinfo.gc.ca/docs/en/kyoto/Default.cfm
The KYOTO Protocol – Mechanisms
Joint Action or Bubbles (Article 4)
Agreement among regional groups to achieve their reduction
targets jointly provided that their combine aggregated anthropogenic
emissions of GHGs do not exceed their quantified emission limitation
and reduction commitments.
Source: Kyoto Protocol at http://www.sdinfo.gc.ca/docs/en/kyoto/Default.cfm
GHG Market Equilibrium
Pri
ceD
S
Quantity
P*
Q*
GHG Market Equilibrium with cap
Pri
ceD
S
Quantity
P*
Q*
P
GHG Market Equilibrium with cap - Why there?
Pri
ceD
S
Quantity
P*
Q*
D+E
P
Pri
ce
D
S
CappedregionQuantity
Q* Quantity
D
S
Uncapped RegionQuantity
P*
Q*
Multi region GHG Market Equilibrium with cap – Autarkic, no trade
P
Pri
ce
D
S
CappedregionQuantity
Q* Quantity
D
S
Uncapped RegionQuantity
P*
Q*
Multi region GHG Market Equilibrium with cap – with trade
P
P
EDES
Pri
ce
D
S
CappedregionQuantity
Q* Quantity
D
S
Uncapped RegionQuantity
P*
Q*
Multi region GHG Market Equilibrium with cap – with trade and transactions costs
P
P
EDES
TransactionsCosts
The KYOTO Protocol – U.S. cost of compliance with the KYOTO
The Kyoto Protocol would have required the US to reduce its emissions
7% from 1990 levels from 2008 to 2012.
To comply US emissions must decline by 30% from projected 2010
levels which results in a GDP loss of about 1-4% annually (Weyant 1999).
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a special issue of The Energy Journal, p. xxxi, and xxxiii, 1999.
Figure 8. Carbon tax under alternative trading regimes
Figure 9. GDP loss under alternative trading regimes
Source EPA Inventory of U.S. GHG Emissions Inventory 2011
Magnitude of U.S. GHGEmissions
GWP and Climate ChangeGWP is used to make comparisons of relative contributions among GHGs to global warming by comparing the ability of each gas to trap radiation in the atmosphere over a chosen time horizon.
IPCC uses CO2 as a reference gas with a GWP of 1.
HFC-23 260 9400 12000 10000
CF-4 >50,000 3900 5700 8900
SF-6 3200 151000 22200 32400
GWP values and lifetimes from 2007 IPCC(2001 IPCC in parentheses)
Lifetime (years)
GWP time horizon
20 years 100 years 500 years
Carbon dioxide 1 (1) 1 (1) 1 (1)
Methane 12 (12) 72 (62) 25 (23) 7.6 (7)
Nitrous oxide 114 (114) 289 (275) 298 (296) 153 (156)
Source: Climate Change 2001: The Scientific Basis, Table 6.7: Direct GWP at http://www.grida.no/climate/ipcc_tar/wg1/248.htm#tab67
Multigas valueThe EMF did a comparison between mitigating GHGs with CO2-only and multi-gassesThe results examined a scenario that attained a stabilization target that stabilized radiative forcing at 4.5 Wm-2 relative to pre-Industrial times by 2150.
They found show that under multi-gas mitigation versus CO2 only that the reductions are much cheaper if all are managed.
Carbon Permit Price (2000 $US/tCe)
Essentially, less costly reductions in NonCO2 gases are displacing more costly reductions in CO2 from the energy sector.
Source http://emf.stanford.edu/publications/emf_21_multigreenhouse_gas_mitigation_and_climate_policy/
2025 2050 2075 2100
CO2 only $101.3 $314.2 $406.2 $877.0
CO2 plus non-CO2 $57.8 $158.7 $241.8 $480.3
% reduction 48% 41% 23% 39%
Other reasons Why Might We Mitigate?
Domestic policies at national or state level
Clean skies 18% reduction in intensity
4 pollutants NOX,SOX,Mercury,CO2
State initiatives
Voluntary registry
International pressures for emission reduction
European pressure
Other reasons Why Might We Mitigate?
Domestic policies at national or state level
Clean skies 18% reduction in intensity
Source EPA Inventory of U.S. GHG Emissions Inventory 2011
Other reasons Why Might We Mitigate?
Industry planning under uncertainty
Demonstration projects
Interests at risk
Multinationals
Need for cheap emission offsets
Firms investing
CCX
Congruence of programs with other agriculturally related
societal desires such as farm income support and water
quality protection
Development of another market for farm products
Relative size of Agriculture Emissions
Agriculture is largest source (EIA)Emissions rose via EPA estimates from 195 in 1990 to 215 in 2008
IPCC data
Historical Emissions Estimates
Source: Apparently this was drawn from W. F. Ruddiman, 2001. Earth's Climate: Past and Future. W. H. Freeman and Sons, New York
Sequestration may have the potential to alleviate somewhere in the neighborhood of 25% of the historical atmospheric greenhouse gas accumulation.
Why is this happening - Emissions growing
Emissions growing this figure goes to 2006
http://www.epa.gov/climatechange/emissions/globalghg.html
Why is this happening - Energy use growing
Why is this happening - Emissions growing
Rank CountryAnnual CO2 emissions[8][9]
(in thousands of metric tons)Percentage of global total
World 29,321,302 100%1 China[10] 6,538,367.00 22.30%2 United States 5,830,381.00 19.91%- European Union (27) 4,177,817.86[11] 14.04%3 India 1,612,362.00 5.50%4 Russia 1,537,357.00 5.24%5 Japan 1,254,543.00 4.28%6 Germany 787,936.00 2.69%7 Canada 557,340.00 1.90%8 United Kingdom 539,617.00 1.84%9 South Korea 503,321.00 1.72%10 Iran 495,987.00 1.69%11 Mexico 471,459.00 1.61%12 Italy[12] 456,428.00 1.56%13 South Africa 433,527.00 1.48%14 Saudi Arabia 402,450.00 1.37%15 Indonesia 397,143.00 1.35%16 Australia 374,045.00 1.28%17 France[13] 371,757.00 1.27%18 Brazil 368,317.00 1.26%19 Spain 359,260.00 1.23%20 Ukraine 317,537.00 1.08%21 Poland 317,379.00 1.08%22 Turkey 288,681.00 0.98%
List of countries by 2007 emissions
http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions
Source: IEA WEO 2007 and Socolow presentation at Americas Climate Choices
Per-capita fossil-fuel CO2 emissions, 2005
1-
World emissions: 27 billion tons CO2
STABILIZATION
AVERAGE TODAY
“Stabilization”: 1 ton CO2/yr per capita
It is not sufficient to limit emissions in the prosperous parts of the world and allow the less fortunate to catch up. Such an outcome would overwhelm the planet.
The emissions of the future rich must eventually equal the emissions of today’s poor, …
…not the other way around.
Socolow presentation at Americas Climate Choices
Agricultural and Forestry Sector Contributed 4% of global energy-related CO2 emissions in 1995 but
about 50% of methane and 70% of nitrous oxide Conservation Improvement of agriculture (e.g. conservation tillage,
reduction of land use intensity, etc.) Sequestration management Substitute product production (biofuels) Altered ag management of cattle, rice, fertilization Fuel switching
Waste Management Sector Use of landfill gas for heat and electricity Increase of waste recycling rates Utilize waste paper as a biofuel
Energy Sector Contributed 38 % of global energy-related CO2 emissions in 1995 Improvement in the energy efficiency of power plants Fuel switching Deregulation of the electric power sector to drive technological progress
Potential Sectoral GHG Emission Mitigation Strategies
Buildings Sector Contributed 31% of global energy-related CO2 emissions in 1995 Improvement in the energy efficiency of windows, lighting,
refrigeration, air conditioning, etc. Passive solar design & integrated building Fuel switching
Transportation Sector Contributed 22 % of global energy-related CO2 emissions in 1995 Improvement in the energy efficiency of vehicles Vehicle Fuel switching to natural gas, electricity, biofuels Subsidize mass transit
Industry Sector Contributed 43 % of global energy-related CO2 emissions in 1995 Improvement in the energy efficiency Material efficiency improvement e.g. recycling, material
substitution Fuel switching
Potential Sectoral GHG Emission Mitigation Strategies
Adapted from CC 2001 mitigation p. 29-40
Potential Sectoral GHG Emission Mitigation Strategies
IPCC WGIII 2007
Climate Change Mitigation Challenge
Complex set of sourcesEnergy is keyTie to DevelopmentMultinational needBRIC countriesFutility of unilateral actionLegislationOffset controversy
Here are a set of policies, measures, and instruments to limit GHG
emissions or enhance sequestration by sinks.
Command and control
Taxes on emissions, carbon, and/or energy
Subsidies
Tradable emissions permits (cap-and-trade)
Non-tradable permits
Emission reduction credits
Voluntary agreements
Technology and performance standards
Product bans
Direct government spending and investment (R&D)
Policies, Measures, and Instruments
Adapted from CC 2001 mitigation p. 399-450 http://www.grida.no/climate/ipcc_tar/wg3/224.htm
Policies, Measures, and Instruments
Command and Control
Imposing a specific and inflexible emission standards on sources
Taxes on Emissions, Carbon, and/or Energy
A levy imposed by a government on each unit of emissions or on
carbon content of fossil fuels (carbon tax), or on the energy content
of fuels
Advantage: 1. Yields cost minimizing allocation
2. Promotes technological progress
3. Increases revenues to subsidize R&D
Disadvantage: 1. How to determined an appropriate level of Tax?
Marginal control cost
Cost ($)
Emission Reductions (tons)
Tax
15D
A B
CO
Policies, Measures, and Instruments
Subsidies
A direct payment from the government
Lowers existing subsidies to fossil fuel use, or increasing subsidies
for practices reducing emissions or enhance sinks
Tradable Emissions Permits (Cap-and-Trade)
Puts a cap or limit on aggregate GHG emissions on sources
Requires each source to hold permits equal to its actual emissions
Allows permits to be traded among sources
Advantage: Flexibility
Disadvantage: Need to consider transaction costs
Non-Tradable Permits
Puts a cap or limit on GHG emissions on each regulated source
Requires each source to keep its actual emissions below its own cap
Does not allow trading among sources
Policies, Measures, and Instruments
Emission Reduction Credits
Combination of a deposit or fee (tax) on a emissions with a refund or
rebate (subsidy) for emission reductions
Credits are implemented through
Offset policy
Bubble policy
Netting within the firms
Banking
Advantage: allow growth
Disadvantage: quantifiability, and monitoring and enforcement
Policies, Measures, and Instruments
Voluntary Agreements
An agreement between a government authority and one or more
private parties
A unilateral commitment to achieve environmental objectives or to
improve environmental performance beyond compliance
Technology and Performance Standards
Establishment of minimum requirements for products or processes
to reduce GHG emissions associated with the manufacture or use of
the products or processes
Product Bans
Prohibition on the use of a specified product in a particular
application, such as hydrofluorocarbons (HFCs) in refrigeration
systems
Policies, Measures, and Instruments
Direct Government Spending and Investment (R&D)
Government expenditures on research and development (R&D)
measures to lower GHG emissions or enhance GHG sinks
Remarks:
(1). A group of countries can implement one or a combination of these instruments.
(2). If we control too much at the present time, the current generation pays high price but the future generation gains benefit, or a vice versa.
Adapted from CC 2001 mitigation p. 399-450 http://www.grida.no/climate/ipcc_tar/wg3/224.htm
Policy Directions Policy toward climate change consists of three elements:
– Let it happen – ignore– Pursue mitigation (reducing the extent of climate
change), – Pursue adaptation (reducing the impact of change),
and
Schematic from Parry, 2009
Policy Sensitivity Let it happen – ignore or only reduce
– Effects on previous page
Pursue mitigation (reducing the extent of climate change) – Energy will be major thrust
• De carbonize• Tax• Pursue renewable
– So may be agricultural activities• Land use change – domestic and ILUC• Sequestration – tree planting, grass, tillage• Emissions, fossil fuel use, enteric, manure, rice• Offsets – biofuel and bio electricity – watch out for LUC
Pursue adaptation (reducing the impact of change)– Maintenance of current productivity– Autonomous – varieties, planting dates, crop mix, enterprise choice– Facilitating adaptation
• R&D on adapted varieties, practices• Extension• Facilities
– Compensation (international)
Resource competition from both
Source : IPCC AR4t
Climate models predict increasing emissions will cause a temp increase
Lag until effectiveness Degree of climate change - What is projected
Where we are
0
100
200
300
400
500
0 20 40 60 80 100 120 140 160
C p
rice
($
/tC
eq)
Soil carbon sequestration (mmtce)
TechnicalPotential
EconomicPotential
CompetitivePotential
Source: B. McCarl and U. Schneider, presented at 2001 EPA-USDA Forestry and Agriculture Greenhouse Gas Modeling Forum.
Example: U.S. ag soil potential:
Q: Can We Identify the Competitive Potential for U.S. Ag & Forest Options?
ALTERNATIVE OFFSET SCENARIOSEPA ANALYSIS OF THE CLIMATE SECURITY ACT OF 2008: S. 2191 (MARCH 2008)
No offsets
15/15
Unlimitedoffsets
Example of Acid Rain Program
SO2 and NOx are the primary causes.
Acid rain occurs when these gases react in the atmosphere with water,
oxygen, and other chemicals to form various acidic compounds.
This acid rain program is designed to reduce emission of SO2 AND NOx
by 10 million tons below 1980 levels at the lowest cost to society.
How does this program work?
Technology improvement
Fuel switching
Conserves energy
Allows Trading System
Auctions and Direct Sales
Opt-in Program
Etc.
http://www.epa.gov/airmarkets/acidrain/#what
Example of Acid Rain Program – allowance trading system
EPA sets allowances based on historical fuel consumption and
emission rates.
Allowance trading provides incentives for energy conservation
and technology innovation that can both lower the cost of
compliance and yield pollution prevention benefits.
Regulated firms decide the most cost-effective way to use
available resources to comply with the acid rain requirements by
employing energy conservation measures
switching to a lower sulfur fuel
employing pollution control technologies, etc.
Firms that reduce their emissions below their regulated
allowances may trade their allowances, sell them on the open
market or through EPA auctions, or bank them to cover
emissions in future years.
Source: EPA’s Acid Rain Program: Overview at http://www.epa.gov/airmarkets/arp/overview.html
The ozone layer acts as a blanket in the stratosphere that protects us
from harmful UV radiation. CFC-12 destroys this layer of gas which
leads to an increase in cataracts and skin cancer.
The largest uses of CFC-12 is as a refrigerant in motor vehicle air
conditioners
Firms are given funds to switch from ozone pollutable to other sources.
Taxes on ozone
Certification Requirements
Regulation on service shops must certify to EPA that they have
acquired and are properly using approved refrigerant recovery
equipment, and that each person using the equipment has been
properly trained and certified.
Global Action to Protect the Ozone Layer
Montreal protocol => agreement to phase out production
of most ozone-depleting substances
Example of Ozone Depletion Program
Source: EPA Regulatory Requirements at http://www.epa.gov/ozone/title6/609/justfax.html
Introduction to GHG Mitigation Economics – Emissions Tax
Marginalcost/Price S
D
MCCarbonTax ($/ton)
Emission Reduction (tons)
Quantity of Emissions (tons)
Tax
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a special issue of The Energy Journal, p. xxxi, and xxxiii, 1999.
Figure 1. Supply and DemandFor Energy/Carbon
Figure 2. Marginal Cost Curvefor Carbon Emission Reductions
Introduction to GHG Mitigation Economics – Emissions Trading
A1 A2
B1 B2
Ta’
Ta
Tb
Tb’
MCa
MCb
Ra’ Ra Rb Rb’
Emission Reductions (tons)
Country A Country B
No trade: Cost of emission reductions to A is A1+A2, to B is B1.With trade: Cost of emission reductions to A is A1, to B is B1+B2.Total global cost is reduced by A2 – B2Total emission reductions = Ra’ + Rb’ = Ra + Rb
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a special issue of The Energy Journal, p. xxxi, and xxxiii, 1999.
Figure 3. Two Country Example of International Emissions
Mitigation Assessment
Include at least two scenarios "baseline" or "reference" scenario
and "mitigation scenario" Assumptions e.g. economic growth, technology, etc.
Source: CC 2001 mitigation p. 24 at http://www.grida.no/climate/ipcc_tar/wg3/015.htm#24
Figure TS.1: Qualitative directions of SRES scenarios for different indicators
Mitigation Assessment
Assessment criterion
GHG reduction potential (Tons of carbon equivalent)
Other environmental considerations
soil conservation, watershed management, etc.
Economic and Social Considerations
Cost-effectiveness
GDP, jobs created or lost, implications for long-
term development, etc.
Differential impacts on countries, income groups
or future generations
Issues on Mitigation Assessment
Assessment criterion (continued)
Institutional and Political Considerations Monitoring, enforcement issues Capacity to pass through political and bureaucratic
processes and sustain political support Consistency with other public policies
Uncertainty
Ranking mitigation strategies accordingly to criterion
NAS Mitigation reccomendations
• Adopt a mechanism for setting an economy-wide carbon pricing system .
• Complement the carbon price with a portfolio of policies to:• realize the practical potential for near term emissions reductions
through energy efficiency and low emission energy sources in the electric and transportation sectors;
• establish the technical and economic feasibility of carbon capture and storage and evolutionary nuclear technologies;
• accelerate the retirement, retrofitting or replacement of GHG emission-intensive infrastructure.
• Create new technology choices by investing heavily in research and crafting policies to stimulate innovation.
• Design and implement climate change limiting policies to promote equitable outcomes, with special attention to disadvantaged populations.
• Establish the United States as a leader to stimulate other countries to adopt GHG reduction targets.
• Enable flexibility and experimentation with policies to reduce GHG emissions at regional, state and local levels.
• Design policies that balance durability and consistency with flexibility and capacity for modification as we learn from experience.
http://dels.nas.edu/Report/Limiting-Magnitude-Climate-Change/12785
References
Climate Change 2001: The Scientific Basis, Contribution of Working Group I to the
Third Assessment Report of the Intergovernment Panel on Climate Change at
http://www.grida.no/climate/ipcc_tar/wg1/index.htm
Climate Change 2001: Mitigation, Contribution of Working Group III to the Third
Assessment Report of the Intergovernment Panel on Climate Change at
http://www.grida.no/climate/ipcc_tar/wg3/224.htm
EPA’s Clean Air Markets – Acid Rain Programs and Regulations at
http://www.epa.gov/airmarkets/arp/overview.html
EPA Regulatory Requirements for Servicing of Motor Vehicle Air Conditioners at
http://www.epa.gov/ozone/title6/609/justfax.html
EPA Inventory of U.S. GHG Emissions Inventory 2003 (Draft)
KYOTO Protocol at http://www.sdinfo.gc.ca/docs/en/kyoto/Default.cfm
McCarl, B. A., and J. Antle, Agricultural Soil Carbon Sequestration – Economic Issues
and Research Needs, Working Paper #0875, Department of Agricultural Economic,
Texas A&M University, College Station, TX
Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a
special issue of The Energy Journal, 1999.