Potential for climate change mitigation through afforestation: an economic analysis of fossil fuel substitution and carbon sequestration benefits

Abstract

The impetus for this paper is Canada's commitment under the Kyoto Protocol to reduce national greenhouse gas emissions as well as reducing dependency on fossil fuels. This research assesses the economic viability of using biomass from afforested lands and industrial wood waste as a feedstock for ethanol production to substitute for fossil fuels in the transportation sector. Afforestation can increase the size of the carbon sink and also provide a source of renewable energy. Ethanol offers an excellent opportunity for greenhouse gas mitigation due to market potential, an ability to offset significant emissions from the transportation sector, and reduce emissions from CO2-intensive waste-management systems. A case study of the economics of a hypothetical ethanol production facility found that a facility capable of producing 122 million litres of ethanol annually could have a net present value of CDN$245 million over a planning horizon of 36 years. This facility would require a supply of up to 960 oven-dry tonnes of wood-biomass per day and would result in net annual reductions of greenhouse gas emissions of approximately 349,000 tonnes of CO2. This includes the carbon sequestered through the afforestation as well as emissions avoided through fossil fuel substitution. Using biomass from afforested lands and industrial wood waste as a fuel for energy production can be an economically viable tool for reducing greenhouse gas levels in the atmosphere, reducing reliance on fossil fuels and reducing the sensitivity of transportation fuel prices to changes in gasoline prices.