Michael ObersteinerMichael Obersteiner

IIASAIIASA

Regional Carbon Budgets: From methodologies to Regional Carbon Budgets: From methodologies to quantification.quantification.

Beijing, China, 15-18 November 2004Beijing, China, 15-18 November 2004

Coupling Carbon Coupling Carbon Processes and Processes and

EconomicsEconomics

Overview

• Motivation to manage the carbon cycle– Financial Analyst´s point of view

• Scenarios of what needs to be done– What is the biospheric contribution

• More trade offs than synergies

Effective compliance with Art. 2 UNFCCC!?

Risk analysis… the Chartist

Nokia

Ericsson Siemens

Siemens

Ericsson

Nokia

Buy Gold

Data is from the climate system!!!

GISP and IPCC data, own calculations

Concentration

s

Growing

No

AnalogueLevel&speed

High volatility

Abrupt

Chang

e

The obvious number!?

371, ….550,….750…?

Which number would you pick…..?

Gold from Science?

• IPCC for the 4th assessment emission scenarios that lead to concentrations of <450 are not planned

• No low emission climate runs

• No benchmark

Climate Risk Management -Ostriching?

Climat

e

• Stabilization target is a SOCIAL CONSTRUCTION – Plausibility of

stabilization targets

• Little preparation

How to stabilize atmospheric CO2 concentrations

• Use less energy– Improve energy efficiency– Life style changes– Stabilize population

• Use other forms of energy– Natural gas instead of coal– Renewables– Nuclear

• Capture and store carbon – From fossil fuels and/or biomass (in energy conversion plants)– From the atmosphere (in trees, soils or in CO2 capture facilities)

Spatial Distribution of GDP

• Important inputs to the spatially explicit forestry and regional agricultural model

• Necessary information for vulnerability, adaptation and impact assessment

The cost to stabilise the atmosphere

Global GDP

0

50

100

150

200

250

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Year

Trillio

n U

SD/y

r

Bau

350 ppm

450 ppm

550 ppm

Source Azar & Schneider, 2002. Ecological Economics

• The figure shows the The figure shows the various sources of various sources of GHGs and the GHGs and the mitigation achieved mitigation achieved from the baseline in the from the baseline in the A2 mitigation scenarioA2 mitigation scenario

• Energy represents the Energy represents the top sector for potential top sector for potential mitigationmitigation

• Sinks contribute Sinks contribute significantly in significantly in reduction of forest CO2reduction of forest CO2

-4000

6000

16000

26000

36000

46000

56000

2000 2020 2040 2060 2080 2100

To

tal

GH

G E

mis

sio

ns

(MtC

eq

uiv

.)

Energy

Industry Agriculture

Mit

igati

on o

f CO

2, CH

4,

N2O

and o

ther

GH

GS

Forest emissions (negative)

A2-Stabilization Scenario(Fossil Intensive)

CO2-concentration 350 ppm, with capture

Supply

0

100

200

300

400

500

600

700

800

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

EJ/yr

nuclear

coal

oil

solar H2

bio fuels

solar electr.

wind

gas

solar heat

hydro

coal w capt.

gas w capt.

bio w capt.

Herzog et al Scientific American, February 2000.

with structural traps

130 – 500 Gton C

30 – 650 Gton C

Enhanced oil recovery

20 – 65 Gton C

Grimston et al (2001).

Carbon storage possibilities

• Biophysical– Climate, CO2

etc…

– Land Cover

– Relief

• Socioeconomic– Population

– GDP

– Forest sector

Forest and agri growth modeled

1. LUC2. C sequestration/GHGs3. Bio4BE production

Land values

LU competition

Management

options applied

Input OutputModeling

National Economic ModelsScenario Market

Regional Farm Type Models

Farm Models Stand level Models

Regional Forest Models

Mod

el f

or G

HG

Res

pons

e to

Man

agem

entC

om

mo

n D

ata

ba

se

a

nd

Sta

nd

ard

s

• Common Database and Data Structure• Harmonized System Boundaries• IPCC GPG and /or FGA Accounting• Consistent Baseline Assumptions• Joint Catalogue of GHG Mitigation Measures• Uniform Validation Criteria• Agreed Sustainability Constraints• Common IT Standards• Standard Scenario Assumptions and Story Lines• Joint Vision

INTEGRATED POLICY FRAMEWORK

Geo

refe

renc

ed

Dat

aba

se

EPIC simulates many processes:

Weather: simulated or actualHydrology: evapotranspiration, runoff,

percolation, 5 PET equations,...Erosion: wind and water, 6 erosion equations,...Carbon sequestration: plant residue, manure,

leaching, sediment, ...Crop growth: NPK uptake, stresses, yields,

N-fixation,...Fertilization: application, runoff, leaching,

mineralization, denitrification, volatilization, nitrification,...

Tillage: mixing, harvest efficiencies,...Irrigation and furrow diking,...Drainage: depth,... Pesticide: application, movement,

degradation,...Grazing: trampling, efficiency,...Manure application and transport,...Crop rotations: inter-cropping, weed,

competition, annual and perennial crops,...on a daily time

step

Geography of Analysis

Soil H R UTopography H R UC lim ate H R U

Intersection

etc.

EPIC HRU

PICUS 2.0

Overview of the Regional Agri-Model

Data(FADN)

- Yields- Area- Variable costs- Producing activities- Size of farms- Altitude- …

Other sources

- Emissions coefficients- Soils characteristics- Fertilizer uses and prices- …

Typology15 countries, 101

regions734 farm-types

Model inputs- Prices- Technical parameters- CAP-related parameters

Calibration

734 modelsMaximize gross margin

Subject to :- Technical constraints

- Policy constraints

Model output- Optimal area- Livestock numbers- Animal feeding- Net emissions

Estimation

Basic Modeling

Processing

Markets

Feed Mixing

Other Resources

AUM Grazing

Labor

Pasture Land

Natl. Inputs

Forestland

Water

Livestock Production

CropProduction

Export

DomesticDemand

Import

Biofuel/GHGDemand

ForestProduction

Cropland

Mitigation Strategy Equilibrium

0

100

200

300

400

500

0 20 40 60 80 100 120 140 160 180 200

Car

bon

pri

ce (

$/tc

e)

Emission reduction (mmtce)

CH4N2O

Ag-Soil sequestration

Afforestation

Biofuel offsets

Afforestation in B1

Carbon SequestrationTotal Carbon Supply: B1/A2

Cumulative C-sequestration potential in B1

0

50

100

150

200

250

300

350

0 100 200 300 400

GtC

C-p

ric

e [

$/t

C]

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

Cumulative C-sequestration potential in A2

0

50

100

150

200

250

300

350

-100 0 100 200 300

GtCC

-pri

ce

[$

/tC

]

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

Bioenergy Supply for 2000-2100 B1 (Price < 6$/GJ)

Land Use Change until 2100 for B1Intensity map: (affected) ha x C-uptake

Existing forestAfforestationDeforestation

Wrap-up

• Slumbering Beast

• Much lower stabilization targets are NECESSARY AND PLAUSIBLE

• The Problem is currently with the fossil fuels and a large(st) potential of the solution is in the Agri&Forestry&Bioenergy sector.

Winning is not easy

• Carbon price (tax or

cap-and-trade system)

• Energy efficiency standards

• Support technology development

• Agi&Forestry market reform

• Minimize associated social and environmental costs

-4000

6000

16000

26000

36000

46000

56000

2000 2020 2040 2060 2080 2100

To

tal

GH

G E

mis

sio

ns

(MtC

eq

uiv

.)

Energy

Industry Agriculture

Mit

igati

on o

f CO

2, CH

4,

N2O

and o

ther

GH

GS

Forest emissions (negative)

0

5

10

15

20

25

30

35

1980 1990 2000

GW

THANK YOU!

371, ….550,….750…?

Carbon permitElectricityElectricity Pulp / paper

Biomass

Energy Market

Policy

Climate PolicySector Policy /

Technology

Land use Policy

Modular Commitment Strategy

CO2 El

BM \pi

Diversity of Approaches

• Engineering models & Biophysical Model

• Equilibrium Approaches (Static – Dynamic)

• Spatially Explicit and Multisectoral

• Risk and Uncertainty Augmented

Goal

• Contribute to integrate sinks in ETS– GPG (accounting, certification, verification)– Cost competitiveness and potentials– Transaction Cost

• Contribute to policy formulation– CAP– Energy– Climate – Forestry– Clean Air– …

Policy Integration