Measuring the economic tradeoffs between forest carbon sequestration and forest bioenergy production

Shellye Annette Clark, Purdue University

Abstract

A variety of different mechanisms have been proposed and developed to halt or reverse the buildup of greenhouse gases in the atmosphere. Technological solutions to combat the excessive buildup of atmospheric greenhouse gases include sequestration, capture and storage, renewable bioenergy, and combustion efficiency. In that forests constitute a large percentage of land globally, the technological solutions that take advantage of forestland to mitigate climate change are carbon sequestration in trees as well as bioelectricity and biofuel production from forest biomass. According to the United States Department of Energy (US DOE, 2010), carbon sequestration is one of the most effective methods known to mitigate greenhouse gas buildup. However, in today's environment, renewable energy is a desired option for many countries to simultaneously reduce dependence on imported petroleum and reduce greenhouse gas emissions that contribute to climate change. Climate change researchers who focus on forestry find that although the benefits of forest carbon sequestration are widely apparent, the same cannot be said for the benefits of forest bioenergy. Therefore, our objective is to model the interactions and interdependencies between forest carbon sequestration and forest bioenergy production. It is important to determine the role forestry will play in the context of climate change policies, such as renewable portfolio standards for bioelectricity, renewable fuel standards for biofuels, and forest carbon sequestration because forests account for nearly one-third of global land area (FAO, 2006). Our primary objective is to examine the global supply, demand, welfare, and emissions impacts of forest-based climate change mitigation policies. We use a global computable general equilibrium (CGE) trade model to measure the tradeoffs between forest used for carbon sequestration and forest biomass used for fossil fuel substitution. Specifically, we use the recursively dynamic Future Agricultural Resources Model (FARM). FARM's general equilibrium framework is able to evaluate the land use, welfare and emissions impacts on the global economy of forest-based greenhouse mitigation strategies using a computable general equilibrium framework. We then use a theoretical forestry model that incorporates the prices of carbon and forest productions from the FARM model to determine if a particular amount of forest sequestration is feasible based on timber vintages (age classes) and forest yield curves. We find that forest bioenergy production through renewable energy policies and forest carbon sequestration via a carbon tax/subsidy scheme are able to coexist in the global economy. Subsidized forest carbon sequestration can reach up to 57 million metric tonnes carbon dioxide equivalent (mtCO2e) annually in the United States in conjunction with a carbon tax on fossil fuels, even when all of the renewable energy mandates for bioelectricity and biofuels are met in the United States and Europe. The theoretical model confirms that at $50 per mtCO2e this scenario is indeed a possibility with little impacts on welfare. All mitigation policies are implemented in a revenue neutral manner. We conclude that in the presence of existing bioenergy policies, there is still an opportunity to reduce atmospheric carbon dioxide with subsidized forest sequestration.

Degree

Ph.D.

Advisors

Tyner, Purdue University.

Subject Area

Agricultural economics

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