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Sensitivity of marginal abatement cost curves to variation of G4M parameters Mykola Gusti, Nikolay Khabarov and Nicklas Forsell 4th International Workshop on Uncertainty in Atmospheric Emissions, Krakw , 7th-9th October, 2015 Acknowledgements.

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Sensitivity of marginal abatement cost curves to variation of G4M parameters

Mykola Gusti, Nikolay Khabarov and Nicklas Forsell

4th International Workshop on Uncertainty in Atmospheric Emissions, Kraków, 7th-9th October, 2015

  • Acknowledgements. The work has been carried out within the

project "Options Market and Risk-Reduction Tools for REDD+" funded by the Norwegian Agency for Development Cooperation under agreement number QZA-0464 QZA-13/0074.

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Outline

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M

  • parameters. 4th IWUAE, Kraków, 7th-9th October, 2015

2

  • Introduction
  • Method
  • Results and discussion
  • Conclusions and Challenges
  • Questions and answers
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Introduction

  • MACC – a “tool” for analysis of mitigation

policies

Kesicki (2011)

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 3

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SLIDE 4

Introduction

  • Model derived MACC:

(BAU emissions – Mitigated emissions) against mitigation costs

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 4

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SLIDE 5

Introduction

  • Model uncertainty and MACC:

(BAU emissions + Err – Mitigated emissions - Err) (BAU emissions + Err1 – Mitigated emissions – Err2)

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 5

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SLIDE 6

Introduction

  • Model uncertainty and MACC:

(BAU emissions + Err – Mitigated emissions - Err) ? (BAU emissions + Err1 – Mitigated emissions – Err2) ?

What is sensitivity of the MACCs to selected model parameters?

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 6

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SLIDE 7

Introduction

  • how the parameter uncertainties can impact

GHG abatement policies related to forest sector?

Modified figure from Kesicki (2011)

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 7

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Generating LUC abatement cost curves: Modeling framework

8

Afforestation, reforestation, deforestation

Assumptions on GDP, population, bio-energy by world regions

Projections of net forestry emissions Elaboration of basic drivers Elaboration of projections Basic drivers

EFISCEN

Abatement cost curve estimation Forest management Cropland management Afforestation, reforestation, deforestation Forest management

EFISCEN G4M

Trade

GLOBIOM

Calibration to FAO data

Wood production potential, init. prices Wood prices, land rents, wood demand

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 9

Method: G4M overview

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 9

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Method G4M: LUC decisions

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 10

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Method

  • “Baseline”: CO2 initial prices starting in 2020 (0, 1, 3, 5,

10, 15, 20, 25, 30, 40, 50, 60, 80, 100, 120 USD/tCO2) and rising 5% / year (CO2 price range: 4-520 USD/ton CO2 in 2050)

  • “Sensitivity”: decrease/increase cr, w, and l them by 1,

2.5, 5, 10, 50 and 90% one by one for each CO2 price

  • Build MACC as a difference of total biomass CO2

emissions at non-zero CO2 price and zero CO2 price in 2030

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 11

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 12

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Böttcher et al. Global forestry emission projections and abatement costs EGU 2012 - Vienna - 22-27 April 2012 13

  • 1300
  • 800
  • 300

200 700 1200 1700 20 40 60 80 100 120 MtCO2/year USD/tCO2

Deviation of total MACC due to agriculture land price variation

lm1 lm10 lm2_5 lm5 lm50 lm90 lp1 lp10 lp2_5 lp5 lp50 lp90

Results and discussion

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 14

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 15

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 16

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 17

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Impact on policy analysis

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 18

C tax Resulting reduction

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Impact on policy analysis

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 19

Resulting C price C allowances

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Final remarks

  • Non-linear IAM - MACCs may be sensitive to variation of

the model parameters.

  • G4M MACCs are much more sensitive to parameter

variation at a certain range of CO2 prices, usually low CO2 prices.

  • G4M total biomass CO2 MACCs are most sensitive to

variation of corruption coefficient and agriculture land price.

  • MACC uncertainty can influence outcome of policy

analysis.

  • Inform experts applying MACCs for policy analysis on

MACC uncertainty!

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 20

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Contact information

Mykola Gusti Ecosystem Services and Management International Institute for Applied Systems Analysis Schlossplatz 1, A-2361 Laxenburg, Austria Phone: (+43 2236) 807 534 Fax: (+43 2236) 71 313 Web: http://www.iiasa.ac.at Email: gusti@iiasa.ac.at

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 22

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SLIDE 23

Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 23

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Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 24

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SLIDE 25

Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 25

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SLIDE 26

Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 26

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SLIDE 27

Results and discussion

Gusti et al. Sensitivity of marginal abatement cost curves to variation of G4M parameters. 4th IWUAE, Kraków, 7th-9th October, 2015 27

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SLIDE 28

Model comparison

28

Kindermann et al. 2008: Global emission reduction (avoided deforestation)

USD / t CO2 CO2 emission reduction, Mt CO2/year

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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Method (details*)

29 Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013

*Gusti et al., 2012, Simulation of REDD+ options using IIASA model cluster, iEMSs-2012

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SLIDE 30

Modeling framework

30

Afforestation, reforestation, deforestation

Assumptions on GDP, population, bio-energy by world regions

Projections of net forestry emissions Elaboration of basic drivers Elaboration of projections Basic drivers

EFISCEN

Abatement cost curve estimation Forest management Cropland management Afforestation, reforestation, deforestation Forest management

EFISCEN G4M

Trade

GLOBIOM

Calibration to FAO data

Wood production potential, init. prices Wood prices, land rents, wood demand

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-31
SLIDE 31

Modeling approach

31

G4M

Forestry

Change in NPV(s) and Wood price Wood demand

World regions

Potential harvest Carbon stocks Initial NPV(s) and wood price

Crop yields Manage- ment params

Simulation units Half degree grid cells

GLOBIOM

Land use

EPIC

Agriculture

GDP and

  • Pop. density
  • Calib. to FAO

FRA 2010 and Forest Loss Map Afforestation Deforestation Agriculture land

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 32

0.5ox 0.5o

FM:

H=WD NPV→max

32

G4M: Modeling approach

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 33

G4M: Modeling approach

33

Site Increment tC/ha DBH Height Yield Stocking degree Age / Tree Size NPP Slope Altitude Climate Soil Forest Age Area Biomass Tree Size 1 2 3 ... Economic Harvesting costs FM Decisions Area Thinning Rotation time Sawnwood Costs Pulpwood Species Planting costs Wood price LU Decisions Afforest Deforest Land price Forestry NPV GLOBIOM Wood demand Wood price market corr. Land price market corr. Land use change CELL 1 COUNTRY OR REGION CELL 3 CELL 2 CELL N CELL .... Wood demand

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 34

G4M: FM targets and options

34

  • FM targets:

– Harvest demanded amount of wood on country scale – Harvest demanded amount of wood + maximize biomass comparing to baseline (NPV->max)

  • FM options:

– Tune rotation length: max MAI – max biomass – Change harvest location (depending on CAI)

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-35
SLIDE 35

Results: Global forest area change (baseline)

  • Net forest area

decreases until 2015

  • But increases after

2020

35

Affor and defor. baseline area rel. 2010

0,10% 0,15% 0,20% 0,25% 0,30% 0,35%

2010 2015 2020 2025 2030 2035 2040 2045 2050

Afforestation Deforestation

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 36

Results: Global LUC removals and emissions (baseline)

  • Afforested areas

accumulate carbon slowly

  • Net LUC emissions

> 0 until 2045

36

Baseline Aff. removals and Def. emissions rel. 2010

0% 20% 40% 60% 80% 100% 120% 2010 2015 2020 2025 2030 2035 2040 2045 2050 Afforestation Deforestation

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 37

Results: Global forest area change

37

  • Def. area rel. 2010 under non-zero C price

0% 20% 40% 60% 80% 100% 120% 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 10 20 30 50 70 100 200 300 500 1000

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-38
SLIDE 38

Results: Global net forest area change

  • FAO level is met but

trend is different

  • Already in baseline

global forest area increases after 2020

38

Net forest area change in M ha

  • 15
  • 10
  • 5

5 10 2000 2010 2020 2030 2040 2050 Baseline FAO

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-39
SLIDE 39

Results: Global net forest area change

  • FAO level is met but

trend is different

  • Already in baseline

global forest area increases after 2020

  • Afforestation stays

rather constant, declining after 2020

  • Deforestation

decreasing

39

Net forest area change in M ha

  • 15
  • 10
  • 5

5 10 2000 2010 2020 2030 2040 2050 Baseline FAO AR area D area

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 40

Results: Baseline development global forestry emissions

40

  • Deforestation emissions

expected to decline constantly

  • Afforestation (start in

2000) kicking in late

  • Therefore net land use

change emissions negative only after 2040

Forest biomass emissions in Mt CO2

  • 10000
  • 8000
  • 6000
  • 4000
  • 2000

2000 4000 6000 8000 1990 2000 2010 2020 2030 2040 2050 net LUC AR D

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-41
SLIDE 41

Results: Baseline development global forestry emissions

41

  • Deforestation emissions

expected to decline constantly

  • Afforestation (start in

2000) kicking in late

  • Therefore net land use

change emissions negative only after 2040

  • Forest sink declining due

to ageing forest

  • Overall emissions rather

stable

Forest biomass emissions in Mt CO2

  • 10000
  • 8000
  • 6000
  • 4000
  • 2000

2000 4000 6000 8000 1990 2000 2010 2020 2030 2040 2050 net LUC AR D FM total

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-42
SLIDE 42

Results: Global net forest area change under different C prices

  • If carbon has a price

net area loss declines more rapidly and area gain after 2020 is higher

  • A price of 30 USD

increases net gain by factor four

  • Strongest effects at

medium C prices (20- 50 USD)

42

Net forest area change in M ha

  • 15
  • 10
  • 5

5 10 2000 2010 2020 2030 2040 2050 net baseline 10 20 30 50 70 100 FAO

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-43
SLIDE 43

Results: Potential and costs for additional storage in non-Annex I

  • CO2 storage in comparison

to baseline at different C price levels

  • Afforestation potential

negligible (high baseline, time lag)

  • Reduced deforestation puts

pressure on remaining forest (harvest increases) resulting in negative cost curve

43

20 40 60 80 100 120

  • 500

500 1000 1500 2000 Carbon price [USD/t C] Mitigation potential [Mt CO2] AR D FM Total Average emission reduction until year 2030

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
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SLIDE 44

Sensitivities: Corruption factor effects for non-Annex I

  • Country specific corruption

factors (based on World Bank data) lower potential in baseline

  • To be interpreted as

efficiency of USD spent on emission reduction

  • Without corruption effects

potentials can be doubled for lower carbon prices

44

20 40 60 80 100 120 500 1000 1500 2000 Carbon price [USD/t C] Mitigation potential [Mt CO2] Baseline Without corruption effects Average emission reduction until year 2030

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-45
SLIDE 45

Comparison to historic estimates

  • Global emissions (Pg C)
  • Similar estimates for land use

change emissions

  • Underestimation of sink by G4M
  • Opposing fluxes lead to big

difference in net flux

45

0,0 0,5 1,0 1,5 2,0 2,5 3,0 1990-1999 2000-2007

Forest sink

  • 2,0
  • 1,5
  • 1,0
  • 0,5

0,0 1990-1999 2000-2007

Land use change

0,0 0,5 1,0 1,5 1990-1999 2000-2007

Global net sink

Pan et al. 2011 Science Express G4M baseline 2011

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013
slide-46
SLIDE 46

Results: Effect of integrated MACC curves in Annex I countries

46

20 40 60 80 100 120

  • 100

100 300 500 Afforestation Deforestation Forest management SUM 20 40 60 80 100 120

  • 100

100 300 500 Average emission reduction until year 2030

Fuss et al. An approach to assessing benefits of advanced global carbon

  • bservation system. ICDC 2013 - Beijing – 3-7 June 2013