Cost-efficient carbon abatement strategies in the EU with specific focus on forest carbon sequestration

Abstract: Forests can contribute to the reduction of carbon emissions by storing carbon in standing biomass or in products made of wood. Alternatively, harvested biomass can be used as bioenergy and replace fossil fuels. This thesis analyses the cost-efficiency of introducing forest carbon sequestration (FCS) into EU climate policy. Quantification of the potential and cost of FCS is important from a policy perspective, since this abatement method is being considered for inclusion in future EU climate policy. The quantification in this thesis is based on a mathematical optimisation model that aims to find the least costly combination of abatement strategies to reach a specific carbon emission target. The model covers the EU-27 member states and can be applied in static and stochastic form (paper I) or dynamic form (paper II-IV). The main research questions investigated in the four separate studies are: i) The cost-efficiency and equity of including FCS in EU climate policy to 2020; ii) whether it is worth increasing FCS at the expense of bioenergy and forest products; iii) whether renewable energy forms (wind, hydro and photovoltaics) can compete with FCS as abatement methods; and iv) what the effects of climate change in terms of increased/reduced FCS will be during the current century and the accompanying implications on the cost of EU climate policy. The results, which can be useful for policy making, demonstrate cost efficiency in using FCS as an abatement method. However, this may be at the expense of reduced equity among EU member states, since forests are distributed unequally throughout the EU. Furthermore, FCS seems to be a more cost-efficient option in terms of carbon abatement than bioenergy and, to some extent, forest products. This is also the case when comparing the cost-efficiency with that of renewables, even on modelling renewables with endogenous technological change in the form of learning-by-doing. The results provide indications of increasing FCS during the current century due to climate change, in particular in northern Europe, where warmer seasons and more precipitation are expected. This would have a positive effect on the cost of reaching the emissions target, meaning that the overall abatement cost would be reduced.