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Interaction of Agriculture and Energy in Global Greenhouse Gas Mitigation Scenarios Forestry and Agriculture Greenhouse Gas Modeling Forum Shepherdstown, West Virginia September 26-29, 2011 Ron Sands* Economic Research Service, USDA *The views expressed are the author’s and should not be attributed to the Economic Research Service or USDA

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Interaction of Agriculture and Energyin Global Greenhouse Gas Mitigation Scenarios Forestry and Agriculture Greenhouse Gas Modeling ForumShepherdstown, West VirginiaSeptember 26-29, 2011Ron Sands*Economic Research Service, USDA *The views expressed are the authors and should not be attributed to the Economic Research Service or USDAContributors to FARM ProjectERS StaffRon SandsJayson BeckmanCarol JonesCooperative AgreementsGAMS Development CorporationBrent Sohngen (Ohio State University)Ph.D. StudentsSam Evans (Colorado State University)Shellye Clark (Purdue University)Xioahui Tian (Ohio State University)International CollaboratorsKatja Schumacher (Institute for Applied Ecology, Berlin)Hannah Frster (Institute for Applied Ecology, Berlin)OverviewGlobal Scenarios for Policy AnalysisRepresentative Concentration Pathways (RCPs)Current Energy Modeling Forum (EMF) studyBrief History of Future Agricultural Resources Model (FARM)Model structure and dataCGE FrameworkGTAP 7 Data and AggregationSample results (Global electricity generation)Carbon Dioxide Capture and Storage (CCS)CCS with bio-electricitySample results (US electricity generation)

Replacement for SRES scenarios used in IPPC 4th Assessment Report (AR4)Input for climate models used in IPPC 5th Assessment Report (AR5)Assessment of climate change impactsInterpretation of RCP scenariosHigh reference scenario for emissions (RCP 8.5)Medium reference scenario or high mitigation scenario (RCP 6.0)Low reference scenario or intermediate mitigation scenario (RCP 4.5)Low mitigation scenario (RCP 2.6)Representative Concentration PathwaysRepresentative Concentration Pathways

Source: Van Vuuren DP et al (2011) The representative concentration pathways: an overview. Climatic Change DOI 10.1007/s10584-011-0148-z

Source: Van Vuuren DP et al (2011) The representative concentration pathways: an overview. Climatic Change DOI 10.1007/s10584-011-0148-zEMF-24: Technology Strategies for Greenhouse Gas Reductions and Energy SecurityModeling for insights, not numbersParticipants Global scenarios (18 modeling teams)U.S. scenarios (12 modeling teams)EMF steering group specifies a large set of scenarios that vary by policy and availability of technologiesModeling teams choose whether to run a policy focus subset or technology focus subset of scenariosTechnology scenarios vary by efficiency or availability of key energy technologiesEnd-use energy efficiencyCO2 Capture and Storage (CCS)Nuclear energyWind and solarBio-energy potential

EMF-24 Global ScenariosTechnology Dimension DefaultSingle technologies changedConventional vs. renewableFrozen technology Energy IntensityRefLowRefRefRefRefRefLowFrozenCCSOnOn OffOnOnOnOnOffOffNuclear energyOnOnOnOffOnOnOnOffFrozenWind & SolarAdvAdvAdvAdvConsAdvConsAdvFrozenBioenergy potentialHighHighHighHighHighLowLowHighFrozenPolicy DimensionBaselineR2G1R2G2R2G3R2G4R2G5R2G6R2G7R2G8450 CO2eR2G9R2G10R2G11R2G12R2G13R2G14R2G15R2G16550 CO2eR2G17R2G18R2G19R2G20R2G21R2G22R2G23R2G24R2G25G8 R2G26R2G27Muddling through R2G28R2G29Brief History of FARMLegacy FARMThe first version of the Future Agricultural Resources Model (FARM) was constructed in the early 1990s by Roy Darwin and others at the Economic Research ServiceBy partitioning land into land classes, this model provided a unique capability among CGE models to simulate land use on a global scaleEarly versions of the FARM model were used to simulate the impact of a changed climate or biofuel policies on global land use, agricultural production, and international tradeNew FARMPlanning began in 2009 with model construction in 2010Adds a time dimension for analysis of alternative climate policiesTracks energy consumption and greenhouse gas emissionsProvides a balance between greenhouse gas mitigation opportunities in agriculture and energy

CGE FrameworkNew FARM uses Tom Rutherfords GTAP in GAMS code as a starting pointComparative-static global CGE modelArmington trade between world regionsConstant-elasticity-of-substitution (CES) production and utility functionsFully compatible with GTAP 7 social accountsMajor extensions for new FARMConversion from comparative-static to dynamic-recursive framework with 10-year time stepsConversion of consumer demand from CES to Linear Expenditure System (LES)Production system allows joint productsIntroduction of land classes for agricultural and forestry productionIntroduction of electricity generating technologiesGTAP 7 Data and AggregationGlobal Trade Analysis Project (GTAP) based at Purdue University provides social accounting matrix (SAM) for year 2004GTAP coverage includes 113 world regions and 57 commoditiesData include bilateral trade for all commoditiesGTAP version 8 will have a 2007 base yearAggregation for EMF-2415 world regions: usa, japan, westEU, eastEU, othOECD90, russia, othREF, china, india, indonesia, othAsia, midEastNAf, subSahAf, brazil, othLatAmer25 GTAP production sectors: 5 energy carriers (coal, oil, natural gas, refined petroleum, electricity); 11 agricultural sectors; forestry; 6 industries; transportation; services6 electricity generation technologies: coal, gas/oil, nuclear, hydro, wind/solar, bio-electricity (using IEA data)New sectors: biomass, optionCCS, household transportation, household energy servicesGTAP provides other types of dataEnergy consumption in million tons of oil equivalent (mtoe)Land rents for each region across 18 agro-ecological zones (AEZs) aggregated within each FARM region to 6 land classesProduction of forest products

Global CO2 Emission ScenariosGlobal Electricity Generation (reference G1)all technologiesrenewablesGlobal Electricity Generation (mitigation G17)all technologiesrenewablesGlobal Electricity Generation (mitigation G24)all technologiesrenewablesCO2 Capture and Storage (CCS)CCS is a stand-alone production technology that can be used by any large point source of emissionsCoal- and gas-fired electricity generation must purchase either CO2 permits or CCS through a CES aggregator optionCCSoptionCCS purchases CO2 permits if the CO2 price is less than cost per ton of CCSCO2 price must be greater than zero as permits are an input to a CES function (benchmark CO2 price is $1 per ton)optionCCScapitalCO2 permits(demand)electricityCCSBio-electricity with CCSelecBio generates electricity by combusting biomass for a steam turbineCO2 from biomass combustion can be captured and stored if CO2 price is high enoughelecBio provides two joint products: electricity and CO2 permitsAt low CO2 prices, supply of permits equals demand for permits and there is no net sequestration At CO2 prices high enough to drive CCS, supply of permits is greater than demand for permitsNegative net emissions are possible if quantity of CO2 sequestered is greater than emissions from related energy demands, such as energy needed to operate capture and storage process

optionCCScapitalCO2 permits(demand)electricity(demand)CCSelecBiocapitalCO2 permits(supply)biomasselectricity(supply)US Electricity Generation (reference G1)US Electricity Generation (mitigation G17)Bio-electricity with CCSTo Do ListNon-CO2 greenhouse gasesCH4 from rice productionN2O from fertilizerCH4 and N2O from livestockOther biofuel pathwaysCorn-ethanolSugar-ethanolLiquid fuels from cellulosic biomassLand competitionForest dynamicsCarbon emissions from land use change

EXTRA SLIDESNew FARMModel ClassificationU.S. onlyGlobal coveragePartial eq.General eq.Partial eq.General eq.Comparative staticREAPLegacy FARM GTAPComparative steady-stateREAP(with forestry)Dynamic recursiveNew FARMDynamic equilibrium (limited foresight)GCAM (with forward market for forest products)New FARM (with dynamic forestry)Dynamic optimizationFASOMGlobal Timber ModelLand Competitioncapital labor LC1 LC2 LC3 LC4 LC5 LC6capital labor LC1 LC2 LC3 LC4 LC5 LC6sVAsVAcrop A value addedforest value addedland class 1land class 2land class 6CETCETCETCESCESNested CES Productioncapital labor landdomesticinputimporttransportmargindomesticinputimporttransportmargindomesticinputCO2margintypical fossil energy inputCO2margintransportmarginimportsMsYsVAsDsDsDsMsMs=0s=0s=0s=0

Source: Van Vuuren DP et al (2011) The representative concentration pathways: an overview. Climatic Change DOI 10.1007/s10584-011-0148-z