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A numerical model for cost effective mitigation of CO2 in the EU with stochastic carbon sink

Author

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  • Gren, Ing-Marie
  • Munnich, Miriam
  • Carlsson, Mattias
  • Elofsson, Katarina

Abstract

This paper presents a model for the analysis of the potential of carbon sinks in the EU Emissions Trading Scheme (ETS) under conditions of stochastic carbon sequestration by forest land. A partial equilibrium model is developed which takes into account both the ETS and national commitments. Chance constraint programming is used to analyze the role of stochastic carbon sinks for national and EU-wide costs as well as carbon allowance price. The results show that the inclusion of the carbon sink option can reduce costs by as much as 2/3, but the cost saving is dampened when higher reliability of targets achievement is required. When carbon sinks are included, some countries with large carbon sequestration in relation to carbon emissions can achieve their national commitments without any costly reductions in energy use. However, cost estimates are sensitive to changes in assumed parameter values, in particular to changes in given business-as-usual levels of the use of fossil fuel.

Suggested Citation

  • Gren, Ing-Marie & Munnich, Miriam & Carlsson, Mattias & Elofsson, Katarina, 2009. "A numerical model for cost effective mitigation of CO2 in the EU with stochastic carbon sink," Department of Economics publications 9327, Swedish University of Agricultural Sciences, Department of Economics.
  • Handle: RePEc:sua:ekonwp:9327
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    File URL: http://pub.epsilon.slu.se/9327/
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    Cited by:

    1. Elofsson, Katarina & Gren, Ing-Marie, 2013. "Should forests be used as uncertain carbon sinks or uncertain fossil fuel substitutes in the EU Roadmap to 2050?," Working Paper Series 2013:8, Swedish University of Agricultural Sciences, Department Economics.
    2. Gren, Ing-Marie & Carlsson, Mattias & Elofsson, Katarina & Munnich, Miriam, 2012. "Stochastic carbon sinks for combating carbon dioxide emissions in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1523-1531.
    3. Vass, Miriam Münnich & Elofsson, Katarina, 2016. "Is forest carbon sequestration at the expense of bioenergy and forest products cost-efficient in EU climate policy to 2050?," Journal of Forest Economics, Elsevier, vol. 24(C), pages 82-105.
    4. Münnich Vass, Miriam & Elofsson, Katarina & Gren, Ing-Marie, 2013. "An equity assessment of introducing uncertain forest carbon sequestration in EU climate policy," Energy Policy, Elsevier, vol. 61(C), pages 1432-1442.

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