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Climate Change Mitigation
Bruce A. McCarl
Department of Agricultural Economics
Texas A&M University
Key Concepts
“Mitigation” is a human intervention to reduce the
sources or enhance the sinks of greenhouse gases.
Mitigation, together with adaptation to climate
change, contributes to the goal expressed in Article
2 of the United Nations Framework Convention on
Climate Change (UNFCCC) to
“prevent dangerous anthropogenic interference with
the climate system… within a time frame to allow
ecosystems to adapt… to ensure that food
production is not threatened and to enable
economic development to proceed in a sustainable
manner”.
Key Concepts
Climate Change is a global commons problem
that implies the need for international
cooperation in tandem with regional policies.
•
Because the emissions of any agent affect every other agent, an
effective outcome will not be achieved if individual agents advance
their interests independently of others.
• International cooperation can contribute
• Research and development in support of mitigation is a public good,
which means that international cooperation can play a constructive
role in the coordinated development and diffusion of technologies.
• This gives rise to separate needs for cooperation on R&D, opening up
of markets, and the creation of incentives to encourage private firms to
develop and deploy new technologies and households to adopt them.
Why Might We Mitigate?

Greenhouse gas forcing is causing climate change

International agreements under UNFCCC - Kyoto Protocol

International pressures for emission reduction

Domestic policies at national or state level

Industry planning under uncertainty

Need for cheap emission offsets

Congruence of programs with other agriculturally related
societal desires such as farm income support and water
quality protection

Development of another market for farm products
Greenhouse gas forcing is causing climate change

Basic argument is that GHG emissions are increasing
earth’s heat trapping and climate is warming

See climate change effects notes for discussion
Lag until effectiveness Degree of climate change - What is
projected
Climate
models
predict
increasing
emissions
will cause
a temp
increase
Source : IPCC AR4t
Where we are
Climate and Emissions
From IPCC WGIII AR5
Per-capita fossil-fuel CO2 emissions, 2005
World emissions: 27 billion tons CO2
AVERAGE TODAY
1-
STABILIZATION
Source: IEA WEO 2007 and Socolow presentation at Americas Climate Choices
“Stabilization”: 1 ton CO2/yr per capita
It is not sufficient to limit emissions in the prosperous
parts of the world and allow the less fortunate to catch
up. Such an outcome would overwhelm the planet.
The emissions of the future rich must eventually equal
the emissions of today’s poor, …
…not the other way around.
Socolow presentation at Americas Climate Choices
Sources of emissions
Greenhouse gas evolution
IPCC 2014 WGIII Figure SPM.1. Total annual GHG emissions by groups of gases 1970-2010: CO2 from fossil fuel
combustion and industrial processes (yellow); CO2 from Forestry and Other Land Use (FOLU; orange); CH4 (light blue);
N2O (blue); fluorinated gases (F-gases, dark blue). All emissions are reported in GtCO2eq per year based on GWP100. The
emissions data from FOLU represents land based CO2 emissions from forest and peat fires and decay that approximate to
net CO2 flux from the FOLU sub-sector as described in chapter 11 of this report. The uncertainty ranges provided by the
whiskers for 2010 are illustrative given the limited literature on GHG emission uncertainties. [Figure 1.3]
GWP, GTP and Climate Change
GWP is used to make comparisons of relative contributions among GHGs to
global warming by comparing the ability of each gas to trap radiation in the
atmosphere over a chosen time horizon. Global Temperature change Potential
(GTP), which is change in GMST at a chosen point in time relative to CO2
IPCC uses CO2 as a reference gas with a GWP or GTP of 1.
CO2 lifetime is complicated by multiple physical and biogeochemical processes in
the ocean and the land. For a pulse of about 1000 PgC, about half is removed
within a few decades, but the remaining fraction stays in the atmosphere for much
longer. About 15 to 40% of the CO2 pulse is still in the atmosphere after 1000 years.
Source: Climate Change 2014: The Scientific Basis, Table 8.7
Why is this happening - Emissions growing
Why is
this
Happening
- Emissions
growing
Figure TS.2.
Historical
anthropogenic CO2
emissions from fossil
fuel combustion,
flaring, cement,
Forestry and Other
Land Use (FOLU) in
five major world
regions: OECD1990
(blue); Economies in
Transition (yellow);
Asia (green); Latin
America (red); Middle
East and Africa
(brown). Panels show
regional CO2
emission trends 17506 2010 from: (a) all
sources (c+e); (c)
fossil fuel combustion,
flaring and cement; (e)
FOLU.
Global Greenhouse Gas Data
http://www.epa.gov/climatechange/emissions/globalghg.html
35000
30000
Non-OECD Europe and Eurasia
Africa
25000
Other Americas
Other Asia
20000
Middle East
15000
China
OECD Asia Oceania
10000
OECD Europe
5000
United States
Canada
http://cdiac.ornl.gov/trends/emis/overview_2009.html
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
0
Forces in scenarios


Include at least two scenarios "baseline" or "reference" scenario
and "mitigation scenario"
Assumptions e.g. economic growth, technology, etc.
Figure TS.1: Qualitative directions of SRES scenarios for different indicators
Source: CC 2001 mitigation p. 24 at http://www.grida.no/climate/ipcc_tar/wg3/015.htm#24
Drivers
IPCC WGIII AR5 Figure SPM.3 | Decomposition of the change in total annual CO2 emissions from fossil fuel combustion by
decade and four driving factors: population, income (GDP) per capita, energy intensity of GDP and carbon intensity of energy.
The bar segments show the changes associated with each factor alone, holding the respective other factors constant. Total
emissions changes are indicated by a triangle. The change in emissions over each decade is measured in gigatonnes of CO2
per year [GtCO2 / yr]; income is converted into common units using purchasing power parities. [Figure 1.7]
World GHG emissions - by country
http://www.climatechangeconnection.org/emissions/Globalchangesin
GHG.htm
Why is this happening - Energy emissions
growing
IPCC 2014 WGIII Figure 7.3. Energy supply sector GHG emissions by Subsectors.
Table shows average annual growth rates of emissions over decades and the shares
Plus drivers (POP – population, FEC- final energy consumption)
Why is this happening - Energy use growing
UNFCCC and Kyoto Protocol
Brief History of the International Agreements on Mitigation
UNFCCC : United Nations Framework Convention on Climate Change

Adopted on May 9, 1992 and ratified by 176 governments
worldwide as of October 1998

Developed plans for responding to climate change
“... to achieve ... stabilization of greenhouse gas
concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the
climate system” (p.9).

Established to negotiate net GHGE reduction

Under it’s auspices, the KYOTO Protocol was adopted in
1997.
The KYOTO Protocol

The first major international agreement towards GHGE
reduction

Industrialized countries agreed to reduce emissions of six
greenhouse gases baskets [CO2, CH4, N2O, HFCs, CFs, SF6]
to 5-8% below 1990 levels between 2008 - 2012.

GHGs are compared to each other using global warming
potential (GWP) coefficients

Treatment of emissions of GHGs from land-use change

Approval of offsets through enhancement of sinks

Authorization of mechanisms to reduce the cost of meeting
the target
The KYOTO Protocol – Mechanisms
Mechanisms to reduce the cost of meeting the above target

International Emissions Trading (Article 17)
Allows the trading of assigned amounts within or among
industrialized countries to meet quantified emission limitation or
reduction commitments.

Clean Development Mechanism (CDM) (Article 12)
Allows industrialized countries to finance emission reductions in
developing countries to help in sustainable development and
receive emission credits for doing so.

Joint Implementation (JI) (Article 6)
Allows Annex I transferring/acquiring emission reductions
resulting from activities aiming to reduce anthropogenic emissions
by sources or enhance anthropogenic removals by sinks.
The KYOTO Protocol – Mechanisms

Joint Action or Bubbles (Article 4)
Agreement among regional groups to achieve their reduction targets
jointly provided that their combine aggregated anthropogenic emissions
of GHGs do not exceed their quantified emission limitation and
reduction commitments.
Source: Kyoto Protocol at http://www.sdinfo.gc.ca/docs/en/kyoto/Default.cfm
The KYOTO Protocol – U.S. cost of compliance with the KYOTO

The Kyoto Protocol would have required the US to reduce its emissions
7% from 1990 levels from 2008 to 2012.

To comply US emissions must decline by 30% from projected 2010
levels which results in a GDP loss of about 1-4% annually (Weyant 1999).
Figure 8. Carbon tax under alternative trading regimes
Figure 9. GDP loss under alternative trading regimes
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a special
issue of The Energy Journal, p. xxxi, and xxxiii, 1999.
The KYOTO Protocol – Global Cost of Meeting Scenarios
Economics of
Annex I and Annex II etc
Countries
Price of GHG net emission reduction
GHG Market Equilibrium
D
S
P*
Q*
Quantity of net emission reduction
Price of GHG net emission reduction
GHG Market Equilibrium with cap - Why there?
D
S
P
P*
Q*
Cap
Quantity of net emission reduction
Price of GHG net emission reduction
Multi region GHG Market Equilibrium with cap –
Autarkic, no trade
D
D
S
S
P
P*
Q*
Capped
region
Quantity
Quantity
Q*
Uncapped
Region
Quantity
Price of GHG net emission reduction
Multi region GHG Market Equilibrium with cap – with trade
D
D
S
S
ES
ED
P
P
P*
Q*
Capped
region
Quantity
Quantity
Q*
Uncapped
Region
Quantity
Multi region GHG Market Equilibrium with cap
– with trade and transactions costs
Price
D
D
S
S
ES
ED
P
P
Transactions
Costs
Q*
Capped
region
Quantity
P*
Quantity
Q*
Uncapped
Region
Quantity
Other motivations to Mitigate
Other reasons Why Might We Mitigate?


Domestic policies at national or state level

Clean skies 18% reduction in intensity

4 pollutants NOX,SOX,Mercury,CO2

State initiatives

Voluntary registry
International pressures for emission reduction

European pressure
Other reasons Why Might We Mitigate?

Domestic policies at national or state level

Clean skies 18% reduction in intensity
Source EPA Inventory of U.S. GHG Emissions Inventory 2011
Other reasons Why Might We Mitigate?
Industry planning under uncertainty



Demonstration projects

Interests at risk

Multinationals
Need for cheap emission offsets

Firms investing

CCX
Congruence of programs with other agriculturally related
societal desires such as farm income support and water
quality protection

Development of another market for farm products
Mitigation and Sectors
With some ag emphasis
Magnitude of
U.S. GHG
Emissions
Source EPA Inventory
of U.S. GHG
Emissions Inventory
2011
Historical Emissions Estimates
Sequestration may have the potential to alleviate somewhere in the
neighborhood of 25% of the historical atmospheric greenhouse gas
accumulation.
Source: Apparently this was drawn from W. F. Ruddiman, 2001. Earth's Climate: Past and Future. W. H. Freeman
and Sons, New York
Relative size of Agriculture Emissions
Agriculture is largest source (EIA)
Emissions rose via EPA estimates from 195 in 1990 to
215 in 2008
IPCC data
Potential Sectoral GHG Emission Mitigation Strategies

Agricultural and Forestry Sector







Waste Management Sector




Contributed 4% of global energy-related CO2 emissions in 1995 but
about 50% of methane and 70% of nitrous oxide
Conservation Improvement of agriculture (e.g. conservation tillage,
reduction of land use intensity, etc.)
Sequestration management
Substitute product production (biofuels)
Altered ag management of cattle, rice, fertilization
Fuel switching
Use of landfill gas for heat and electricity
Increase of waste recycling rates
Utilize waste paper as a biofuel
Energy Sector



Contributed 38 % of global energy-related CO2 emissions in 1995
Improvement in the energy efficiency of power plants
Fuel switching

Deregulation of the electric power sector to drive technological progress
Potential Sectoral GHG Emission Mitigation Strategies

Buildings Sector




Contributed 31% of global energy-related CO2 emissions in 1995
Improvement in the energy efficiency of windows, lighting,
refrigeration, air conditioning, etc.
Passive solar design & integrated building

Fuel switching
Transportation Sector





Contributed 22 % of global energy-related CO2 emissions in 1995
Improvement in the energy efficiency of vehicles
Vehicle Fuel switching to natural gas, electricity, biofuels
Subsidize mass transit
Industry Sector




Contributed 43 % of global energy-related CO2 emissions in 1995
Improvement in the energy efficiency
Material efficiency improvement e.g. recycling, material
substitution
Fuel switching
Adapted from CC 2001 mitigation p. 29-40
Potential Sectoral GHG Emission Mitigation Strategies
IPCC WGIII 2007
Climate Change Mitigation Challenge
Complex set of sources
Energy is key
Tie to Development
Multinational need
BRIC countries
Futility of unilateral action
Legislation
Offset controversy
Mitigative Actions
Reduce emissions
Capture and destroy
Switch fuel, Nat. Gas, Biofuel, Nuclear, Hydrogen
Alter consumption
Increase energy efficiency
Change production
Increase sequestration
Capture/store- Oceans, Mines, Aquifers
Biological - Forest, Soils
Geoengineer
Solar rad. mgt –deflect sunlight, increase reflectivity
CO2 removal, biochar, Air capture, Ocean
nourishment including iron
Sectoral
Mitigation
IPCC WGIII AR5 Table
TS.3 | Main sectoral
mitigation measures
categorized by key
mitigation strategies (in
bold) and associated
sectoral indicators
(highlighted in yellow) as
discussed in
Chapters 7 – 12.
Ag Sector Mitigation
IPCC WGIII AR5 Table TS.3 | Main sectoral mitigation measures
categorized by key mitigation strategies (in bold) and associated
sectoral indicators (highlighted in yellow) as discussed in
Chapters 7 – 12.
Comments on strategies
Sequestration
saturation
permanence
storage cost
Bioenergy
life cycle accounting
cost algae $20
land competition
indirect land use
Co-Benefits and costs
Policies, Measures, and Instruments
Here are a set of policies, measures, and instruments to limit GHG
emissions or enhance sequestration by sinks.

Command and control

Taxes on emissions, carbon, and/or energy

Subsidies

Tradable emissions permits (cap-and-trade)

Non-tradable permits

Emission reduction credits

Voluntary agreements

Technology and performance standards

Product bans

Direct government spending and investment (R&D)
Adapted from CC 2001 mitigation p. 399-450 http://www.grida.no/climate/ipcc_tar/wg3/224.htm
Policies, Measures, and Instruments
Here are a set of policies, measures, and instruments to limit GHG
emissions or enhance sequestration by sinks.

Command and control

Taxes on emissions, carbon, and/or energy

Subsidies

Tradable emissions permits (cap-and-trade)

Non-tradable permits

Emission reduction credits

Voluntary agreements

Technology and performance standards

Product bans

Direct government spending and investment (R&D)
Adapted from CC 2001 mitigation p. 399-450 http://www.grida.no/climate/ipcc_tar/wg3/224.htm
Policies, Measures, and Instruments

Command and Control
 Imposing a specific and inflexible emission standards on sources

Taxes on Emissions, Carbon, and/or Energy
 A levy imposed by a government on each unit of emissions or on
carbon content of fossil fuels (carbon tax), or on the energy content
of fuels
 Advantage:
1. Yields cost minimizing allocation
2. Promotes technological progress
Cost ($)
Tax
O
3. Increases revenues to subsidize R&D
A
Marginal control cost
B
C
D
15
Emission Reductions (tons)
 Disadvantage: 1. How to determined an appropriate level of Tax?
Policies, Measures, and Instruments

Subsidies
 A direct payment from the government
 Lowers existing subsidies to fossil fuel use, or increasing subsidies
for practices reducing emissions or enhance sinks

Tradable Emissions Permits (Cap-and-Trade)
 Puts a cap or limit on aggregate GHG emissions on sources
 Requires each source to hold permits equal to its actual emissions
 Allows permits to be traded among sources
 Advantage:
Flexibility
 Disadvantage: Need to consider transaction costs

Non-Tradable Permits
 Puts a cap or limit on GHG emissions on each regulated source
 Requires each source to keep its actual emissions below its own cap
 Does not allow trading among sources
Policies, Measures, and Instruments

Emission Reduction Credits
 Combination of a deposit or fee (tax) on a emissions with a refund or
rebate (subsidy) for emission reductions
 Credits are implemented through

Offset policy

Bubble policy

Netting within the firms

Banking
 Advantage:
allow growth
 Disadvantage: quantifiability, and monitoring and enforcement
Policies, Measures, and Instruments

Voluntary Agreements
 An agreement between a government authority and one or more
private parties
 A unilateral commitment to achieve environmental objectives or to
improve environmental performance beyond compliance

Technology and Performance Standards
 Establishment of minimum requirements for products or processes
to reduce GHG emissions associated with the manufacture or use of
the products or processes

Product Bans
 Prohibition on the use of a specified product in a particular
application, such as hydrofluorocarbons (HFCs) in refrigeration
systems
Policies, Measures, and Instruments

Direct Government Spending and Investment (R&D)
 Government expenditures on research and development (R&D)
measures to lower GHG emissions or enhance GHG sinks
Remarks:
(1). A group of countries can implement one or a combination
of these instruments.
(2). If we control too much at the present time, the current
generation pays high price but the future generation
gains benefit, or a vice versa.
Adapted from CC 2001 mitigation p. 399-450 http://www.grida.no/climate/ipcc_tar/wg3/224.htm
Example of Acid Rain Program

SO2 and NOx are the primary causes.

Acid rain occurs when these gases react in the atmosphere with water,
oxygen, and other chemicals to form various acidic compounds.

This acid rain program is designed to reduce emission of SO2 AND NOx
by 10 million tons below 1980 levels at the lowest cost to society.

How does this program work?
 Technology improvement
 Fuel switching
 Conserves energy
 Allows Trading System
 Auctions and Direct Sales
 Opt-in Program
 Etc.
http://www.epa.gov/airmarkets/acidrain/#what
Example of Acid Rain Program – allowance trading system

EPA sets allowances based on historical fuel consumption and
emission rates.

Allowance trading provides incentives for energy conservation
and technology innovation that can both lower the cost of
compliance and yield pollution prevention benefits.

Regulated firms decide the most cost-effective way to use
available resources to comply with the acid rain requirements by


employing energy conservation measures

switching to a lower sulfur fuel

employing pollution control technologies, etc.
Firms that reduce their emissions below their regulated
allowances may trade their allowances, sell them on the open
market or through EPA auctions, or bank them to cover
emissions in future years.
Source: EPA’s Acid Rain Program: Overview at http://www.epa.gov/airmarkets/arp/overview.html
Example of Ozone Depletion Program

The ozone layer acts as a blanket in the stratosphere that protects us
from harmful UV radiation. CFC-12 destroys this layer of gas which
leads to an increase in cataracts and skin cancer.

The largest uses of CFC-12 is as a refrigerant in motor vehicle air
conditioners

Firms are given funds to switch from ozone pollutable to other sources.

Taxes on ozone

Certification Requirements


Regulation on service shops must certify to EPA that they have
acquired and are properly using approved refrigerant recovery
equipment, and that each person using the equipment has been
properly trained and certified.
Global Action to Protect the Ozone Layer

Montreal protocol
=> agreement to phase out production of
most ozone-depleting substances
Source: EPA Regulatory Requirements at http://www.epa.gov/ozone/title6/609/justfax.html
Introduction to GHG Mitigation Economics – Emissions Tax
Marginal
cost/Price
D
S
Tax
Figure 1. Supply and Demand
For Energy/Carbon
Quantity of Emissions (tons)
Carbon
Tax ($/ton)
MC
Figure 2. Marginal Cost Curve
for Carbon Emission Reductions
Emission Reduction (tons)
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a special issue of
The Energy Journal, p. xxxi, and xxxiii, 1999.
Introduction to GHG Mitigation Economics – Emissions Trading
Country A
Country B
MCa
MCb
Ta
Tb’
Ta’
A1
Tb
A2
B1
Ra’
Ra
Rb
B2
Rb’
Emission Reductions (tons)
Figure 3. Two Country Example of International Emissions
No trade:
Cost of emission reductions to A is A1+A2, to B is B1.
With trade:
Cost of emission reductions to A is A1, to B is B1+B2.
Total global cost is reduced by A2 – B2
Total emission reductions = Ra’ + Rb’ = Ra + Rb
Source: Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation,
a special issue of The Energy Journal, p. xxxi, and xxxiii, 1999.
Mitigation Assessment

Assessment criterion

GHG reduction potential (Tons of carbon equivalent)

Other environmental considerations


soil conservation, watershed management, etc.
Economic and Social Considerations

Cost-effectiveness

GDP, jobs created or lost, implications for longterm development, etc.

Differential impacts on countries, income groups
or future generations
Issues on Mitigation Assessment

Assessment criterion (continued)

Institutional and Political Considerations

Monitoring, enforcement issues

Capacity to pass through political and bureaucratic
processes and sustain political support

Consistency with other public policies

Uncertainty

Ranking mitigation strategies accordingly to criterion
NAS Mitigation reccomendations
• Adopt a mechanism for setting an economy-wide carbon pricing
system .
• Complement the carbon price with a portfolio of policies to:
• realize the practical potential for near term emissions reductions
through energy efficiency and low emission energy sources in the
electric and transportation sectors;
• establish the technical and economic feasibility of carbon capture
and storage and evolutionary nuclear technologies;
• accelerate the retirement, retrofitting or replacement of GHG
emission-intensive infrastructure.
• Create new technology choices by investing heavily in research and
crafting policies to stimulate innovation.
• Design and implement climate change limiting policies to promote
equitable outcomes, with special attention to disadvantaged
populations.
• Establish the United States as a leader to stimulate other countries to
adopt GHG reduction targets.
• Enable flexibility and experimentation with policies to reduce GHG
emissions at regional, state and local levels.
• Design policies that balance durability and consistency with flexibility
and capacity for modification as we learn from experience.
http://dels.nas.edu/Report/Limiting-Magnitude-Climate-Change/12785
Policy Directions

Policy toward climate change consists of three elements:
– Let it happen – ignore
– Pursue mitigation (reducing the extent of climate
change),
– Pursue adaptation (reducing the impact of change),
and
Schematic from Parry, 2009
Policy Sensitivity

Let it happen – ignore or only reduce
– Effects on previous page

Pursue mitigation (reducing the extent of climate change)
– Energy will be major thrust
• De carbonize
• Tax
• Pursue renewable
– So may be agricultural activities
•
•
•
•

Land use change – domestic and ILUC
Sequestration – tree planting, grass, tillage
Emissions, fossil fuel use, enteric, manure, rice
Offsets – biofuel and bio electricity – watch out for LUC
Pursue adaptation (reducing the impact of change)
– Maintenance of current productivity
– Autonomous – varieties, planting dates, crop mix, enterprise choice
– Facilitating adaptation
• R&D on adapted varieties, practices
• Extension
• Facilities
– Compensation (international)

Resource competition from both
References
Climate Change 2001: The Scientific Basis, Contribution of Working Group I to the
Third Assessment Report of the Intergovernment Panel on Climate Change at
http://www.grida.no/climate/ipcc_tar/wg1/index.htm
Climate Change 2001: Mitigation, Contribution of Working Group III to the Third
Assessment Report of the Intergovernment Panel on Climate Change at
http://www.grida.no/climate/ipcc_tar/wg3/224.htm
EPA’s Clean Air Markets – Acid Rain Programs and Regulations at
http://www.epa.gov/airmarkets/arp/overview.html
EPA Regulatory Requirements for Servicing of Motor Vehicle Air Conditioners at
http://www.epa.gov/ozone/title6/609/justfax.html
EPA Inventory of U.S. GHG Emissions Inventory 2003 (Draft)
KYOTO Protocol at http://www.sdinfo.gc.ca/docs/en/kyoto/Default.cfm
McCarl, B. A., and J. Antle, Agricultural Soil Carbon Sequestration – Economic
Issues and Research Needs, Working Paper #0875, Department of Agricultural
Economic, Texas A&M University, College Station, TX
Weyant, J. P. (ed.) The Costs of the KYOTO Protocol: A Multi-Model Evaluation, a
special issue of The Energy Journal, 1999.