Competitiveness of Terrestrial
Greenhouse Gas Offsets: Are They a
Bridge to the Future?
Ron Sands
Joint Global Change Research InstituteBattelle – PNNL – University of Maryland
Bruce McCarl
Texas A&M University
10th AIM International Workshop
Tsukuba, Japan
10-12 March 2005

Introduction¾ Can agriculture and forestry provide a short term
bridge to a longer term reduced-emissions future?
¾ How significant a contribution could agriculture andforestry make relative to non-agricultural (e.g., energyand industrial) mitigation possibilities?

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Methodology for Assessment¾ Models
FASOM-GHG
z Second Generation Modelz¾ FASOM-GHG coveragezFASOM-GHG simulates production of 22 traditional crops, 3biofuel crops, and 29 animal products in 63 U.S. regions,plus 8 forest commodities in a 100 year simulation¾ Prospects for global analysis
Capabilities of FASOM-GHG are not yet available for theglobe
z Modeling activities in Europe and Asiaz

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FASOM-GHG Overview¾ Intertemporal, mathematical programming model depicting landtransfers and other resource allocations among agricultural andforestry sectors in the U.S.
¾ 10-year time steps through 2100
¾ Endogenous variableszzzzz

Commodity and factor prices
Production, consumption, export, and import quantities
Management strategy
Resource use
Economic welfare¾ Greenhouse gas accountingzzz

Carbon dioxide emissions and absorption
Methane emissions
Nitrous oxide emissions

4FASOM-GHG Activities

GHG affectedMitigation strategy

Strategy Nature

CO2CH4N2O

Biofuel production

OffsetX

X

X

Crop mix alteration

Emission, Sequestration

X

Rice acreage reduction

Emission

Crop fertilizer rate reduction

Emission

X

Other crop input alteration

Emission

X

Crop tillage alteration

Sequestration

X

Grassland conversionSequestration

X

Irrigated /dry land conversion

Emission

X

Livestock management

Emission

X

Livestock herd size alteration

Emission

X

X

Livestock system change

Emission

X

X

Liquid manure management

Emission

X

X

X
X
X

X

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Concepts for Assessing Mitigation Potential

Example: U.S. ag soil potential:
C price ($/tCeq)

500

Competitive
Potential

400

EconomicPotential

Technical
Potential

300
200
100
0020

40

60

80

100

120

140160

Soil carbon sequestration (mmtce)
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Greenhouse Gas Mitigation Options(SGM with FASOM-GHG)¾ Terrestrial
Soil sequestrationz Forest managementz Afforestationz Biofuel offsets
z Crop energy managementz¾ Non-CO2 greenhouse gases
Exogenous marginal abatement cost curves
z Developed by U.S. EPA for Energy Modeling Forumz Covers agriculture and industryz¾ Energy efficiency and fuel switching¾ CO2 capture and storage (CCS)7

Second Generation Model¾ SGM characteristics
zzz

Computable general equilibrium model of United States and other world
regions
Five-year time steps from 1990 through 2050
Capital stocks are industry specific with a new vintage for each modeltime step

¾ CO2 capture and storage with electric powerzz

Engineering cost model for capture process from David and Herzog, 2000,“The Cost of Carbon Capture,” Proceedings of the Fifth International
Conference on Greenhouse Gas Control Technologies
Constant cost of carbon disposal ($40 per tC)

8Synchronizing the Models¾ Results from both FASOM-GHG and SGM are path dependentzz

Level of greenhouse gas mitigation depends on current carbon
price and time path of previous carbon prices (FASOM-GHG also
depends on future prices)
Consequence of dynamic structures in FASOM-GHG and SGM¾ Same time path of carbon prices is applied to FASOM-GHG andSGM for consistency¾ Options for carbon price pathszzHotelling
Constant carbon (dioxide) prices¾ Following results at $5, $15, $30, $50 per t of CO2-eqzzCorresponds to prices of $18.33, $55.00, $110.00, $183.33 per t ofcarbon equivalentCarbon dioxide prices start in 2010 and held constant thereafter9

FASOM-GHG Results¾ Results reported as cumulative amount of CO2-eq
sequestered or emissions avoided over timeMore accurate picture of dynamics
z Soil sequestration saturates after three decades
z Quantity of sequestered carbon may decline in later decades,
especially when trees are harvestedz¾ Charts shown for $15 and $30 per t CO2-eq for 2010
through 2100

10FASOM-GHG Results ($15 per t CO2-eq)
90,00080,000

Mt CO2-eq (cumulative)

70,00060,00050,00040,000biomass offsets
crop energy management
forest management
afforestationsoil sequestration

30,00020,00010,00002010 2020 2030 2040 2050 2060 2070 2080 2090 2100

11FASOM-GHG Results ($30 per t CO2-eq)
90,00080,000

Mt CO2-eq (cumulative)

70,00060,00050,00040,000biomass offsets
crop energy management
forest management
afforestationsoil sequestration

30,00020,00010,0000
2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

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Combined Results¾ FASOM-GHG output converted from cumulative
quantities to annual increments¾ Mitigation potential is summed every five years
across FASOM-GHG and SGM¾ Charts shown for $15 and $30 per t CO2-eq for 2010
through 2050
¾ Annual increments for soil sequestration andafforestation can be negative in later decades

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Combined Results ($15 per t CO2-eq)
4,000
3,500

Components of U.S.
Emissions Reductionsat $15 per t CO2-eq

3,000
2,500

FASOM forest mgmt.
FASOM afforestation
FASOM soil
FASOM biofuel
CCS
F-gases
nitrous oxidemethaneenergy system CO2

Mt CO2-eq

2,000
1,500
1,0005000
2010

2020

2030

2040

2050

-500
-1,00014

Combined Results ($30 per t CO2-eq)
4,000
3,500

Components of U.S.
Emissions Reductionsat $30 per t CO2eq

3,000
2,500

FASOM forest mgmt.
FASOM afforestation
FASOM soil
FASOM biofuel
CCSF-gases
nitrous oxidemethaneenergy system CO2

Mt CO2-eq

2,000
1,500
1,00050002010

2020

2030

2040

2050

-500
-1,00015Strategic Comparison (1)zzMasks underlying trends inindividual options
Terrestrial sequestration
contribution decreases
rapidly after initial decades

Total Mitigation Potential
6,000

5,000

4,000
Mt CO2-eq¾ Total mitigation potential
across time and carbon
prices¾ Mitigation potential increases
with CO2 price, as expected¾ Mitigation potential grows
slowly over time at low CO2prices

3,000
$50
2,000

1,000$30$15$5020102020

2030

2040

2050

16Strategic Comparison (2)¾ Contribution of terrestrial
optionszz

Large percentage of total in
first three decades, even athigh carbon prices
Biofuel offsets provide mostof terrestrial contribution inlater decades, but only athigher carbon prices

Terrestrial Fraction of Mitigation
60%
$50
$30
50%
$15
$5
40%

30%

20%

10%

0%
2010

2020

2030

2040

2050

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Conclusions¾ Terrestrial sequestration options are available in the early yearsof a carbon policyzzz

Buy time to develop energy system alternatives that are capitalintensive
However, terrestrial sequestration eventually saturates
Biofuels play an increasing role over time and at higher carbon
prices¾ Non-CO2 greenhouse gas mitigation options are also available
early relative to options in the energy system¾ What is needed for global analysis?
zzz

Development of FASOM-GHG for regions other that U.S.
Assessment of CO2 capture and storage capabilities globally
Revisit non-CO2 marginal abatement costs curves, especially indeveloping countries

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