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Economic prospects of ocean iron fertilization in an international carbon market

  • Rickels, Wilfried
  • Rehdanz, Katrin
  • Oschlies, Andreas

Staying within the 2° C temperature increase target for climate change requires for ambitious emission reduction targets for the 2012–2020 compliance period. Cost-efficiency is a crucial criterion for the achievement of such targets, requiring analyses of all possible options. Enhancing the oceanic carbon sink via ocean iron fertilization (OIF) provides such an option. Our analysis reveals that the critical unit costs per net ton of CO2 sequestered by OIF range from 22 to 28 USD (price level 2000) in a post-Kyoto compliance scenario. The critical unit costs are defined as those that would make an emitter indifferent between various abatement options. With reference to hypothetical short-term large-scale Southern Ocean OIF we are able to show that seven years of OIF provide a number of credits exceeding those obtainable from global forestation projects lasting 20 years. From an economic perspective, our results indicate that OIF can be considered a potentially viable carbon-removal option. However, further research is needed, especially on adverse side-effects and their ecological and economical consequences.

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Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 1 ()
Pages: 129-150

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Handle: RePEc:eee:resene:v:34:y:2012:i:1:p:129-150
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505569

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  1. Gernot Klepper & Sonja Peterson, 2004. "Marginal Abatement Cost Curves in General Equilibrium: The Influence of World Energy Prices," Working Papers 2004.136, Fondazione Eni Enrico Mattei.
  2. 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 09-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Gernot Klepper & Sonja Peterson, 2005. "Emissions Trading, CDM, JI, and More – The Climate Strategy of the EU," Working Papers 2005.55, Fondazione Eni Enrico Mattei.
  4. Kousky, Carolyn & Rostapshova, Olga & Toman, Michael & Zeckhauser, Richard, 2009. "Responding to threats of climate change mega-catastrophes," Policy Research Working Paper Series 5127, The World Bank.
  5. Rickels, Wilfried & Rehdanz, Katrin & Oschlies, Andreas, 2010. "Methods for greenhouse gas offset accounting: A case study of ocean iron fertilization," Ecological Economics, Elsevier, vol. 69(12), pages 2495-2509, October.
  6. 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, vol. 11(2), pages 77-94, September.
  7. repec:cup:cbooks:9780521744447 is not listed on IDEAS
  8. 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.
  9. van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 237-269, September.
  10. 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.
  11. Wilfried Rickels & Katrin Rehdanz & Andreas Oschlies, 2009. "Accounting aspects of ocean iron fertilization," Kiel Working Papers 1572, Kiel Institute for the World Economy.
  12. Bertram, Christine, 2010. "Ocean iron fertilization in the context of the Kyoto protocol and the post-Kyoto process," Energy Policy, Elsevier, vol. 38(2), pages 1130-1139, February.
  13. Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
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