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Report, 2009

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

Gren, Ing-Marie; Carlsson, Mattias; Munnich, Miriam; 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

Keywords

: carbon sequestration; EU emission trading scheme; uncertainty; control costs

Published in

Working Paper Series / Swedish University of Agricultural Sciences, Department of Economics
2009, number: 2009:4
Publisher: Department of Economics, Swedish University of Agricultural Sciences

Authors' information

Swedish University of Agricultural Sciences, Department of Economics
Carlsson, Mattias
Swedish University of Agricultural Sciences, Department of Economics
Munnich, Miriam
Swedish University of Agricultural Sciences, Department of Economics
Swedish University of Agricultural Sciences, Department of Economics

UKÄ Subject classification

Economics

URI (permanent link to this page)

https://res.slu.se/id/publ/29063