WEAI/AERE 2012 - Individual Paper Abstract
Title: Trading woody biomass and negative emissions under a climate mitigation scenario
Author(s): Alice FAVERO, Ca' Foscari University Venice, Yale University, Fondazione Eni Enrico Mattei and Euro- Mediterranean Centre for Climate Change, alice.favero at yale dot edu; Emanuele Massetti, Yale University, Fondazione Eni Enrico Mattei and Euro-Mediterranean Centre for Climate Change, emanuele.massetti at yale dot edu [Photo credit: George Armstrong, FEMA Photo Library]
Abstract: Bio-energy has the potential to be a key mitigation option if combined with carbon capture and sequestration (BECCS) because it can generate both electricity and negative emissions. Unfortunately, the uneven distribution of biomass endowment among world countries makes it difficult to produce energy from BECCS in regions with high energy demand and low abatement opportunities. Trading biomass is definitely a possibility to match demand and supply at global level. This paper examines the multifaceted aspects of woody biomass trade in climate mitigation policy scenarios using the integrated assessment model WITCH. The policy tool is a carbon tax that starts in 2015 at 7 USD/tCO2 and reaches 490 USD/tCO2 in 2100. Results show that the woody biomass market would start in 2035 with 56 EJ/yr traded and a value of 2,500 USD Billions by 2100. Then, comparing the carbon tax scenario with and without trade, we found that with trade emissions are 12% lower by 2100. At the global level, the share of BECCS in the energy mix would raise from 12% to 15% by 2100 while the share of coal with CCS would decline from 8% to 3% by 2100. In addition, we present a sensitivity analysis with four carbon tax trajectories of some key variables such as the international price of woody biomass, volume and value of the biomass market. Finally, we simulate a cap-and-trade scheme with a stabilization target of 550 ppm CO2-eq at 2100 in order to study the implications of biomass trade on the carbon market. We found that the introduction of trade has a downward effect of 25% on the price of permits and 12% on the carbon market volume by 2100. In addition, biomass trade lowers the stabilization cost by 0.2%.