| Carbon sequestration, the extraction and storage of carbon from the atmosphere by biomass, could potentially provide a cost-effective means to reduce net greenhouse gas emissions. The claims on behalf of carbon sequestration may be inadvertently overstated, however. Several key observations emerge from this study. First, although carbon sequestration studies all report results in terms of dollars per ton, the definition of that term varies significantly, meaning that the results of various analyses can not be meaningfully compared. Second, when carbon sequestration is included in an energy-economy model of climate change policy, it appears that carbon sequestration could play a major, if not dominant role in a national carbon emission abatement program, reducing costs of emissions stabilization by as much as 80 percent, saving tens of billions of dollars per year. However, the results are very dependant upon landowners' perceived risk.;Carbon sequestration can still be a major factor in a national carbon emission abatement program. However, because of the interplay of science, economics and law, the most commonly prescribed environmental policy instruments--marketable allowance and taxes--have little or no direct role to play in the implementation process.;Studies may also have overstated the potential for carbon sequestration because they have not considered the implementation process. This study demonstrates that three factors will reduce the cost-effectiveness of carbon sequestration. First, the implementation costs associated with measurement and governance of the government-private sector relation are higher than in the case of carbon source control. Second, legal constraints limit the range of instruments that the government can use to induce private landowners to expand their carbon sinks. The government will likely have to pay private parties to expand their sinks, or undertake direct government production. In either case, additional revenues will be required, introducing social costs associated with excess burden. Third, because of the very long time involved in developing carbon sinks (up to several decades) the government may not be able to make credible commitments against exactions of one type or another that would effectively reduce the value of private sector investments in carbon sinks. Consequently, the private sector will increase the rate of return required for participation, increasing the cost of this option. |
