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Economics prospects of ocean iron fertilization in an international carbon market

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  • Wilfried Rickels
  • Katrin Rehdanz
  • Andreas Oschlies

Abstract

To stay within the 2°C temperature increase target for climate change calls for ambitious emission reduction targets already for the 2012-2020 compliance period. Cost-efficiency is a crucial criterion for the enforcement of such ambitious targets, requiring analyses of all possible abatement options. Among others, enhancing the oceanic carbon sink by ocean iron fertilization (OIF) could be such an option but is currently not seriously considered due to its potentially adverse side effects. In our analysis we consider short-term large-scale OIF modeling experiments for a Post-Kyoto compliance problem to assess the economic prospects of OIF. Our analysis reveals that the critical unit costs per net ton of CO2 sequestered by OIF are in a range of 21.9 to 27.7 USD (price level 2000) assuming that the current limitations regarding the use of carbon credits generated in low cost countries and from forestation is completely relaxed. The critical unit costs are defined as those that would make an emitter indifferent between various abatement options. We are also able to show that already seven years of OIF in the area of 30° south provide the same amount of credits equivalent to a global forestation project for the duration of 20 years. Over all, our results indicate that OIF should be considered as an abatement option, but, further research, especially on adverse side effects, is needed

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1573.

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Length: 23 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:kie:kieliw:1573

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Keywords: climate change; sink enhancement; ocean iron fertilization; CO2 market; emission trading;

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References

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  1. repec:reg:wpaper:629 is not listed on IDEAS
  2. van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, now publishers, vol. 1(3), pages 237-269, September.
  3. Zeckhauser, Richard Jay & Kousky, Carolyn & Rostapshova, Olga V & Toman, Michael, 2010. "Responding to Threats of Climate Change Mega-Catastrophes," Scholarly Articles 4454155, Harvard Kennedy School of Government.
  4. Klepper, Gernot & Peterson, Sonja, 2006. "Marginal abatement cost curves in general equilibrium: The influence of world energy prices," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 3775, Kiel Institute for the World Economy (IfW).
  5. Klepper, Gernot & Peterson, Sonja, 2006. "Emissions trading, CDM, JI, and more : the climate strategy of the EU," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 3814, Kiel Institute for the World Economy (IfW).
  6. Rickels, Wilfried & Rehdanz, Katrin & Oschlies, Andreas, 2010. "Methods for greenhouse gas offset accounting: A case study of ocean iron fertilization," Ecological Economics, Elsevier, Elsevier, vol. 69(12), pages 2495-2509, October.
  7. Gernot Klepper & Sonja Peterson & Katrin Springer, 2003. "DART97: A Description of the Multi-regional, Multi-sectoral Trade Model for the Analysis of Climate Policies," Kiel Working Papers 1149, Kiel Institute for the World Economy.
  8. Wilfried Rickels & Katrin Rehdanz & Andreas Oschlies, 2009. "Accounting aspects of ocean iron fertilization," Kiel Working Papers 1572, Kiel Institute for the World Economy.
  9. Olschewski, Roland & Benítez, Pablo C. & de Koning, G.H.J. & Schlichter, Tomás, 2005. "How attractive are forest carbon sinks? Economic insights into supply and demand of Certified Emission Reductions," Journal of Forest Economics, Elsevier, Elsevier, vol. 11(2), pages 77-94, September.
  10. repec:cup:cbooks:9780521744447 is not listed on IDEAS
  11. Anger, Niels & Dixon, Alistair & Livengood, Erich, 2009. "Interactions of Reduced Deforestation and the Carbon Market: The Role of Market Regulations and Future Commitments," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 09-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
  13. Bertram, Christine, 2010. "Ocean iron fertilization in the context of the Kyoto protocol and the post-Kyoto process," Energy Policy, Elsevier, Elsevier, vol. 38(2), pages 1130-1139, February.
  14. Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2008. "Modeling Land-use Related Greenhouse Gas Sources and Sinks and their Mitigation Potential," GTAP Working Papers 2605, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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Cited by:
  1. Boysen-Hogrefe, Jens & Dovern, Jonas & Groll, Dominik & van Roye, Björn & Scheide, Joachim, 2010. "Droht in Deutschland eine Kreditklemme?," Kiel Discussion Papers 472/473, Kiel Institute for the World Economy (IfW).
  2. Kerstin Güssow & Alexander Proelss & Andreas Oschlies & Katrin Rehdanz & Wilfried Rickels, 2009. "Ocean iron fertilization: Why further research is needed," Kiel Working Papers 1574, Kiel Institute for the World Economy.

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