Scandinavian Working Papers in Economics
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Department Economics, Swedish University of Agricultural Sciences Working Paper Series, Department Economics, Swedish University of Agricultural Sciences

No 2013:5:
Costs and fairness of forest carbon sequestration in EU climate policy

Miriam Munnich Vass (), Katarina Elofsson and Ing-Marie Gren

Abstract: Large emissions of greenhouse gases are expected to cause major environmental problems in the future. European policy makers have therefore declared that they aim to implement cost-efficient and fair policies to reduce carbon emissions. The purpose of this paper is to assess whether the cost of the EU policies for 2020 can be reduced through the inclusion of carbon sequestration as and abatement option while also equity is improved. The assessment is done by numerical calculations using a chance-constrained partial equilibrium model of the EU Emissions Trading Scheme and national effort-sharing targets, where forest sequestration is introduced as an uncertain abatement option. Fairness is evaluated by calculation of Gini-coefficients for six equity criteria to policy outcomes. The estimated Gini-coefficients range between 0.11 and 0.32 for the current policy, between 0.16 and 0.66 if sequestration is included and treated as certain, and between 0.19 and 0.38 when uncertainty about sequestration is taken into account and policy-makers wish to meet targets with at least 90 percent probability. The results show that fairness is reduced when sequestration is included and that the impact is larger when sequestration is treated as certain.

Keywords: carbon sequestration; costs; fairness; EU climate policy; (follow links to similar papers)

JEL-Codes: D63; Q48; Q52; Q58; (follow links to similar papers)

38 pages, May 3, 2013

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This paper is published as:
Munnich Vass, Miriam, Katarina Elofsson and Ing-Marie Gren, (2013), 'An equity assessment of introducing uncertain forest carbon sequestration in the EU climate policy', Energy Policy, Vol. 61, pages 1432-1442

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