Complementary Components

As Marilyn Brown remarked, it seems to take a suite of models to examine the complexities of the numerous policy interactions. Several participants discussed early ongoing efforts to link models and address some of these issues. Three important issues that were continually cited as being critical to the ultimate success of mitigation efforts: offsets, transportation, and air quality.

Offsets

Brian Murray remarked that modeling has shown that offsets are critical to the cost of mitigation policies, but questioned how well offset programs were being modeled. A 2005 EPA analysis suggested that the largest source of offsets in the U.S. domestic market will come from agriculture and forestry (EPA, 2005). Analysts have attempted to incorporate some realism into their estimates, recognizing that certain activities may be slow to come to fruition. But there are several issues that bear watching, to improve understanding of the institutional realities of registering, establishing baselines, and certifying projects. He also underscored that opening up to the international market can reduce costs significantly (Figure 6)—much of this potential is in reducing deforestation in tropical countries. Tim Profeta echoed the need to understand the availability of offsets since this is a major determinant of cost, but he also advised caution when modeling international offsets, which requires an international infrastructure that is not yet ready to deliver. He also suggested that more work could be done to understand and then communicate the effect of delayed availability for domestic (U.S.) offsets.

FIGURE 6. EPA estimates of GHG offset supply functions. SOURCE: EPA, 2005.

FIGURE 6. EPA estimates of GHG offset supply functions. SOURCE: EPA, 2005.

Brian Murray explained that the recent surge in biofuel production, and the targets that have been set in the United States out to 2030, have fundamentally altered the forest and agriculture models—these changes are significant enough to create problems for the mathematical programming framework underpinning the models. Bob Shackleton echoed the need for better information on availability and costs of offsets from a variety of sources of non-CO2 GHGs—he stated that EPA’s cost curves, which most modelers use, are a good foundation but are insufficient. According to CBO’s recent analysis, 40 percent of GHG emission reductions were attributed to offsets, which lowered the carbon price by 30 percent, an issue that will be critical to moderating policy costs in the early years (CBO, 2008).



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