Kiel Institute / Economic prospects of OIF in an intl carbon market
Dan Whaley
markets on the dynamics of those markets, leakage impacts, how the
allocation of credits amongst nations would impact emissions
reductions efforts and ongoing negotiations.
Kiel Working Paper No. 1573 | December 2009
Economic prospects of ocean iron fertilization in an international
carbon market
Wilfried Rickels, Katrin Rehdanz, Andreas Oschlies
Abstract: To stay within the 2°C temperature increase target for
climate change calls for ambitious emission reduction targets already
for the 2012-2020 compliance period. Cost-efficiency is a crucial
criterion for the enforcement of such ambitious targets, requiring
analyses of all possible abatement options. Among others, enhancing
the oceanic carbon sink by ocean iron fertilization (OIF) could be
such an option but is currently not seriously considered due to its
potentially adverse side effects. In our analysis we consider short-
term large-scale OIF modeling experiments for a Post-Kyoto compliance
problem to assess the economic prospects of OIF. Our analysis reveals
that the critical unit costs per net ton of CO2 sequestered by OIF are
in a range of 21.9 to 27.7 USD (price level 2000) assuming that the
current limitations regarding the use of carbon credits generated in
low cost countries and from forestation is completely relaxed. The
critical unit costs are defined as those that would make an emitter
indifferent between various abatement options. We are also able to
show that already seven years of OIF in the area of 30° south provide
the same amount of credits equivalent to a global forestation project
for the duration of 20 years. Over all, our results indicate that OIF
should be considered as an abatement option, but, further research,
especially on adverse side effects, is needed.
(I trust it is no longer necessary for me to insert disclaimers about
Climos and carbon credits for OIF in this forum anymore--i.e. we don't
advocate the use of carbon credits to finance the next stage of
research expeditions. if OIF is ever pursued for mitigation, the
world will figure out whether it wants to pay for the activity
performed or the measured effect that is produced, and that will
likely be a lively debate.)
Also, reading through this paper, there was reference to another quite
interesting piece I had not seen before:
Responding to Threats of Climate Change Mega-Catastrophes
Carolyn Kousky, Olga Rostapshova, Michael Toman, and Richard
Zeckhauser*
Resources for the Future
http://www.rff.org/RFF/Documents/RFF-DP-09-45.pdf
I would say this looks like required reading... very interesting
exploration exploring economics of decision-making under situations
where the NPV of future risk is essentially 100%. Also, an
investigation of limitations of tradtional rational-choice (RC)- based
methods for analyzing response options under these conditions.
However, more relevant to this group, are the three types of response
options explored
1. dramatic global abatement to rapidly stabilize the concentration of
GHGs in the
atmosphere at a level low enough to significantly reduce the
probability of a
catastrophe,
2. development and deployment of controlled geoengineering to reduce
the impacts of
GHG accumulation on the climate system and thus on human well-being,
and
3. various large-scale adaptation measures that would reduce the
consequences of megacatastrophes or short-circuit the cascading of
more localized disasters.
Abstract
There is a low but uncertain probability that climate change could
trigger "mega-catastrophes," severe and at least partly irreversible
adverse effects across broad regions. This paper first discusses the
state of current knowledge and the defining characteristics of
potential climate change mega-catastrophes. While some of these
characteristics present difficulties for using standard rational
choice methods to evaluate response options, there is still a need to
balance the benefits and costs of different possible responses with
appropriate attention to the uncertainties. To that end, we present a
qualitative analysis of
three options for mitigating the risk of climate mega-catastrophes--
drastic abatement of greenhouse gas emissions, development and
implementation of geoengineering, and large-scale ex ante adaptation--
against the criteria of efficacy, cost, robustness, and flexibility.
We discuss the composition of a sound portfolio of initial investments
in reducing the risk of climate change mega-catastrophes.