Kiel Working Papers, Kiel Institute for World Economics
No 1573:
Economics prospects of ocean iron fertilization in an international carbon market
Wilfried Rickels, Katrin Rehdanz and 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
Keywords: climate change, sink enhancement, ocean iron fertilization, CO2 market, emission trading; (follow links to similar papers)
JEL-Codes: Q52,; Q54; (follow links to similar papers)
23 pages, December 2009
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