Optimal biomass allocation between forestry sinks and energy systems by an integrated modelling approach – decarbonization pathways for Hungary

[Geoengineering News]

https://www.tandfonline.com/doi/full/10.1080/14693062.2025.2603032

Authors: Viktor József Rácz,András Mezősi &Gabriella Szajkó

19 December 2025

Abstract

The present study investigates the optimal integrated greenhouse gas emission abatement strategy for the forest and energy sectors. To this end, a cross-sectoral modelling approach is employed, utilizing two sectoral models and applying them to the case of Hungary. The Forest Carbon Sink Optimization Model (FOX) provides information regarding the additional carbon sequestration in the forest sector and the forest fuelwood harvest induced by policy instrument under different carbon price cases. These outputs are then used as inputs to the HU-TIMES energy sector model to determine the remaining greenhouse gas (GHG) abatement target and the available fuelwood capacity for the energy sector. This enables the study of the impact of the relaxation of GHG abatement targets and a decline in the supply of primary solid biomass on the energy sector, under the assumption of ceteris paribus zero national net GHG emission in 2050. The findings suggest that the marginal abatement cost (MAC) of forest carbon offsets is notably lower than the MAC of numerous technologies in the compliance – energy – market. In the analyzed Hungarian case we find that the integrated compliance-offset design redirects over one-third of the necessary abatement from the energy to the forest sector. Consequently, an inverse relationship is observed between the carbon offset price and the total aggregated system cost, thus the socially cost-efficient climate strategy will require the promotion of additional carbon sequestration in forests potentially through carbon pricing. The findings of this study demonstrate notable robustness, even when considering the zero-emission factor attributed to biomass combustion and complete sequestration as part of biomass energy with carbon capture and storage.

Key policy insights

The additional forest carbon sequestration potential explored by the carbon offset market leads to an effective capacity constraint of biomass fuels for the energy sector. This translates to the policy task of optimizing the allocation of biomass between competing carbon sequestration technologies: forests versus bioenergy power plant with carbon capture and storage (BECCS).

Contrary to prevailing expectations, BECCS could be displaced by more cost-efficient forest sequestration realized in offset markets.

In the case of a carbon pricing scheme that includes the forest sector, a significant portion of emission reductions and biomass capacity would be redistributed from the energy sector to the forest sector.

Energy and climate policies and measures (PAMs) should consider cross-sector marginal abatement cost curves to minimize the social cost of GHG abatement.

Source: Taylor & Francis Online