I attended a department seminar yesterday given by Brent Sohngen, a climate change expert and recent co-recipient of the Nobel Prize in Economics.* Brent's seminar addressed the interesting question: If land use policies, storing carbon in forests in particular, are included in international climate change treaties will energy abatement take a backseat?
...it is widely assumed that allowing forestry options would reduce incentives to develop important abatement technologies, and these technologies are ultimately necessary to achieve a stable, albeit changed, climate.
To an economist this is interesting because carbon sequestration in forests may be significantly cheaper than changing the entire world energy consumption and production infrastructure. To an environmentalist this is interesting because storing carbon cheaply in forests may simply delay the inevitable need to reduce energy consumption, or so the argument goes.
So what effect does forest carbon sequestration have on energy abatement and innovation? Some, but there are significant advantages too...
Results show that forestry is an important abatement option, and that its inclusion into an international policy agreement can have a profound effect on the global costs of a climate policy. In particular, we find that the total costs of the forestry program are $1.1 trillion (USD) and the benefits, in terms of additional gross world product relative to meeting the same carbon constraint without forestry, are $3.0 trillion. Forest sequestration actions in the first half of the century, mainly from avoiding deforestation, could contribute 1/3 of total abatement effort, and could provide additional benefits throughout the entire century. Forest sinks have the potential to reduce the price of traded carbon permits, and the overall cost of the policy in terms of income losses, by half. However, in meeting the emissions reductions target, forestry crowds out some of the abatement in the energy sector for the first 10 – 20 years. For example, deployment of low carbon technologies in the energy sector such as carbon capture and sequestration and nuclear power are postponed by 10 - 20 years. Policy induced technological change in clean technologies such as renewables power generation is also reduced. Policy makers should consider developing targeted policies to help achieve the technological advancement to hedge against unknown risks, but they can make substantial headway towards achieving climate stabilization now with forest carbon sequestration.
Good stuff. A little technical, but worth a read.
*Along with thousands of his closest friends on the IPCC.
**"Forestry and the carbon market response to stabilize climate, " 2007, Massimo Tovini, Brent Sohngen and Valentina Bosetti. Ohio State University Working Paper.