| This dissertation presents a case study analysis in which the costs to a U.S. electric utility of reducing its carbon dioxide (CO{dollar}sb2{dollar}) emissions are compared with the costs of carbon-saving forestry projects in Costa Rica and Guatemala. The results show that a large electric utility in the south-central U.S. would find it relatively inexpensive, even profitable given a conducive regulatory treatment, to reduce its CO{dollar}sb2{dollar} emissions by a few percent over the next ten years, through direct investment in energy end-use efficiency improvements. Greater emission reductions can be achieved through further efficiency improvements and through supply-side options such as fuel-switching, but at relatively high marginal costs of {dollar}80--100/ton-carbon (TC).; In comparison, the costs of the forestry projects studied in Central America range from {dollar}1/TC to a worst-case value of about {dollar}55/TC, with most project costs between {dollar}5 and {dollar}13/TC, depending on the type of project, the climate, and the opportunity cost of land. These projects also promise socio-economic benefits at the local level, providing they are adequately endowed with funding, training and institutional support. The total amount of CO{dollar}sb2{dollar} storage potential is significant, about 100 million tons per country, but not enough to suggest that forestry can offset more than a few percent of global CO{dollar}sb2{dollar} emissions from fossil fuel use.; These case studies suggest that international trade in the environmental service of reducing global CO{dollar}sb2{dollar} accumulation could have significant economic and ecological benefits. A transaction in which a utility pays for forestry projects in exchange for credit against an emission reduction policy is an example of an international carbon emission offset (ICEO). ICEO's could provide a currency for funding carbon-saving services as a way to comply with national policies to reduce CO{dollar}sb2{dollar} emissions, as long as compliance is allowed through investments in other countries. This type of North-South transfer is necessary to reconcile economic efficiency and international equity, because of the disparity between the national allocations of responsibility for greenhouse gas emissions and opportunities for emission reductions. |
