CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Content

• What are marginal abatement cost curves (MACC) ?

• Global Warming Gases in CAPRI

• Why GW and why CAPRI ?

• Methodology

• First results

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Abatement cost curves

• Abatement = reduction of negative externality

• Abatement cost curves (ACC)= relation between emission reduction level and total costs

• Marginal abatement cost curves (MACC)= relation between emission reduction level and costs for the last abated unit

• MACC allow (a) to set up an optimal abatement strategy(b) to calculate regional cost differences

under a certain environmental policy (e.g. Kyoto Protocol, nitrate directive, ...)

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Economics of abatement

Emissions Abatement

MAC MACC1

e0eh el

Two abatement technologies

Abatement costs

MACC2

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Global Warming Gases in APRI

• Distinction between direct and indirect emissions

• Direct emission stem directly from agricultural activities(Methane from animals and rice, emissions during fertilizer application or storage, background emission from soils)

• Indirect emission stem from other sectorsand are linked to input use in agriculture(fertilizer and energy production)

• Both are linked to activities levels (hectares/heads) in the supply model via emission factors

• Aggregated to Global Warming Potential via the definition of CO2 impact equivalents

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

• Content of nutrients in harvested material (kg/ton)

• Atmospheric deposition at Nuts 0 level (kg/ha)

• Available nutrient per crop from atmospheric deposition: available nutrient component for the crop coming from the atmosphere.

• Biological fixation: ”self-made fertiliser”

• Mineralisation: nitrate from soils available for the crop (kg/ha)

• Global warming potential of different gases

• Gas output per ton of mineral fertiliser produced (indirectly applied)

• CH4 Output of animals kg per animal and year

• NPK balances

(fertiliser application)

• Optimal activity Levels

Emissions

(passive indicator)

Global Warming Gases in APRI

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Measuring emissions at farm level

YEAR 2002 Emissions (Kg Gas/ ha oder head)*

Aktivity in theregion / Farm type

Technologie

CO2 NO2 CH4

Activity level

ha/head

GWPUnits**

Biological + + X1 +- Wheat production

Conventional + + X2 +

High yield + + X3 -- Dairy cows

Low yield + + X4 +

- Afforestation> 20y Medium density (-) X5(-)

- Grass ___ - + X6+ -

- Pastures ___ (-) X7(-)

Total Xi GWPi

* not measured at farm level but as fixed coefficient** GWP = Global Warming Potential as CO2 Equivalents

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Why Global Warming?

• GW is a global externality: it does not matter where the emission takes place - damage costs are equal among emitters

- no regional pricing is therefore necessary- it allows differentiation through abatement costs

• Most studies look at a comparison across sectors

• Agriculture interesting:subsidies <=> cross compliance <=> low costs for society

• MACC contain the necessary information for an effective use of agri-environmental instruments=> new orientation of the CAP (multi-functionality)

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Why CAPRI?

• CAPRI offers:

- a complete analysis of the agricultural sector=> analyse different strategies inside agriculture

- direct modeling of GWP reductions(ex-post indicator)

- a microeconomic orientation(optimisation problem, shadow values)

- modelling of permit markets(hot issue in the actual international negotiations)

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

Methodology

AB_COST = MAX_Inc(s.t. g>0, GWP unrestricted)

- MAX_Inc(s.t. g>0, GWP <Kyoto)

where: g restrictions in models

(land, set aside,quotas ...)

GWP output of GWP from agriculture

MAX_Inc maximal agricultural income

Kyoto reduction objective

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

First Results

Marginal Abatement Cost Curves (EU countries)

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

1% 3% 5% 7% 9% 11% 13% 15% 17% 19%Final reduction level (1998 emissions base line)

EU

RO

S /

ton

CO 2

e

Greece

Germany

Bel+Lux

Spain

Denmark

France

Ireland

Italy

Holland

Austria

Portugal

Sweden

Finland

U.K.

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

First results

Analysis of individual Gases (EU level)

3953

275

-4.9-2.9

-1.3 -2.2

-14.8

-9.5-7.4

-4.5

-23.2

-13.7

-19.9

-30.4

Base Year(1998)

5% 8% 10% 15%

Gas

em

issi

on

s o

n t

he

bas

e ye

ar (

MM

t G

WP

)

GWP Reduction steps

% r

edu

ctio

n o

f in

div

idu

al

gas

es

Carbon Dioxide

Methane

Nitrous Oxide

Methane (%)

Nitrous Oxide (%)

Carbon Dioxide /%)

CAPRI CAPRI

3rd CAP-STRAT Workshop, 24./25.03.2003, Bologna

First results

Initial Emissions (1998)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00G

R

ES

GE

BE

+LU DK

FR IR IT

ND AT

PT

SW F

I

UK

European Countries

MM

t G

WP

N2O (CAPRI 98) CH4(CAPRI 98) N2O (IPCC 94) CH4(IPCC 94)