Forest Abatement levers: Potential and Cost curve
Thanks to levers such as afforestation and reforestation, the Forestry sector boasts an abatement potential even higher than the projected increase in emissions under the BAU scenario. In total, nine levers have been identified with an abatement potential of up to 131 Mt CO2e (Figure 37). These levers are clustered into three groups:
- Reduced deforestation. This includes lowering the pressure that the need for agricultural land exerts on existing forests. These levers range from agricultural intensification and preparation of new land by means of small-scale irrigation to medium- and large-scale irrigation schemes. In total, they account for an abatement potential of nearly 38 Mt CO2 Since these levers are mainly related to agricultural practices, a more detailed discussion can be found in the chapter on Soil in this appendix.
- Reduced forest degradation. This focuses mainly on reducing the demand for fuelwood through dissemination of a wide range of efficient cooking and baking technologies. With a total abatement potential of around 50 Mt CO2e, this is the largest set of levers identified across all sectors.
- Increased sequestration: This contains mainly large- and small-scale afforestation/ reforestation/area closures and forest management of woodlands and forests. Covering an area of 7 million ha in total (by 2030), this set of levers promises an abatement potential of 42 Mt CO2 Today, several projects to increase the forest cover by afforestation or reforestation are already ongoing. In addition to afforestation/reforestation, sustainable agro-forestry and protected-area management can provide additional levers to increase sequestration.
Figure: Forestry – Abatement and sequestration potential reaches 131 Mt CO2e per year in 2030
Figure: Forestry – Most of the abatement potential has a cost below 5 USD/t CO2e, more than half of it has a negative abatement cost
The cost curve depicted in Figure 38 shows a wide range of abatement costs, which extend across both the negative and the positive areas.
- Most of the levers aiming at reducing forest degradation and reducing deforestation by shifting into more efficient stove technologies and intensified, i.e., higher-yield, agriculture have a negative societal cost: The benefits (e.g., reduced costs for purchasing or collecting fuelwood) surpass the cost of implementing and operating these technologies.
- All levers aiming at increasing sequestration have a positive cost. For some levers, the costs are exceptionally high due to the investments needed for setting them up. The total investment cost for all levers adds up to about USD 10 billion by 2030. This includes the initiatives to curtail deforestation, i.e., agricultural intensification and irrigation (which are discussed in more detail in the chapter on Soil-based emissions) that require the major part of this investment at over USD 6 billion.
Climate finance can play an important contributing role if the abatement potential is appropriately monetized, e.g., in a REDD+ arrangement.
Levers reducing deforestation
Since these levers are mainly related to agricultural practices, they are described in more detail in the Soil chapter of this appendix.
Forestry levers 1-4 – Reduced forest degradation from improved cooking/baking technologies
Fuelwood consumption is the main source of GHG emissions in Ethiopia. The wood is mainly used for residential baking and cooking purposes. As most of the households, particularly in rural areas, use highly energy-inefficient technologies (e.g., open fire or three-stone technology), the improvement potential here is huge.
The dissemination of technologies leading to a reduction in fuelwood consumption, either by making more efficient use of it or by shifting to other, less carbon intense fuels, can be a major lever for GHG abatement. The STC analysed different technologies:
- Fuel-efficient stoves
- Baking stoves, such as the mirt for baking injera bread
- Cooking stoves, such as the tekikil for cooking
- Fuel-shift stoves
- LPG stoves (mostly for cooking)
- Biogas stoves (mostly for cooking)
- Electric stoves and electric mitad (both cooking and baking – in rural areas without grid access, this can also include off-grid solar-powered stoves).
The pattern of stove usage varies between regions and according to cooking/ baking traditions. One common feature, however, is that most households need both a stove for cooking (sauces, coffee, etc.) and a stove for baking (injera). This is reflected in scale-up plans.
The total abatement potential has been calculated for each stove type based on the following information:
- Maximum scale-up. In order to reflect differences in access and cost of alternative fuels/energy sources, the team distinguished between rural and urban populations. The rates are based on a projection of GTP plans (particularly the National Energy Network sectoral GTP review plan), several expert discussions, and cross-checks with other countries that have successfully disseminated efficient stoves. For 2030, the following scale-up targets were estimated (in percentage of rural/urban households respectively):
- Fuelwood-efficient stoves: 80% rural/5% urban (both cooking and baking)
- LPG stoves: 0%/5%
- Biogas stoves: 5%/1%
- Electric stoves: 5%/61% (weighted for cooking and baking).
The distribution between the different types of stoves will be refined during the phase of work detailing the implementation plan for this initiative.
- Efficiency improvement. This indicates the percentage of fuelwood that can be saved by employing different technologies. The calculation is based on efficiency evaluations and testing data of the Ministry of Water and Energy as well as donor organisations active in the promotion of efficient stoves (e.g., GIZ). The potential savings are as follows:
- Fuelwood-efficient stoves: 50% (average for both cooking and baking)
- LPG stoves: 100% (cooking only)
- Biogas stoves: 100% (cooking only)
- Electric stoves: 100% (cooking and baking).
- Emissions from alternative fuels. This takes into account the GHG emissions from alternative fuels used to substitute fuelwood.
- LPG stoves: Emission reduction of 89% due to the higher efficiency of LPG stoves (comparison of fuelwood emissions and LPG emissions based on IPCC combustion emission factors).
- Fuelwood-efficient biogas and electric stoves: Hardly any emissions (assuming that electricity will have near zero emissions from 2015 onwards when all electricity in the grid will be from renewable sources).
Introducing efficient stoves has two distinct effects on GHG emissions. First of all, it reduces forest degradation, with an impact of around 0.9 t biomass/year per household. Secondly, woody biomass acts as carbon sink, amounting to 2.1 t/year per household (if it is not burned). The effect of reduced degradation can be counted in at 100% (resulting in an abatement potential of 1.6 t CO2e/stove/year under the assumption that reduced consumption first decreases direct degradation before it affects the carbon sink). The reduction of emissions through the carbon sink effect does, however, need to be discounted by an adjustment factor to cap the total carbon sink potential of all stoves to the maximum estimated forest regeneration potential (and the gradual realisation of this potential over time). Employing this factor yields an additional abatement potential of 0.6 – 1.4 t CO2e/stove/ year, depending on the stove type.
The total abatement potential of stoves is nearly 51 Mt CO2e in 2030. At 34.3 Mt CO2e, the scale-up of fuelwood-efficient stoves contributes the largest share of this total potential, 14.0 Mt CO2e can be achieved from electric stoves, 2.3 Mt CO2e from biogas stoves, and 0.6 Mt CO2e from LPG stoves.
The abatement cost calculation also differentiates among stove types:
- Stove cost. Stove cost varies by model and has been calculated using average prices of different quotes from disseminating agencies (e.g., MoWE, GIZ, and World Vision). The stove cost is accounted for as a capital expenditure and amortised over the average period of usage, depending on the model as well (based on experiences in Ethiopia and other countries). Costs and period of usage were calculated as follows:
- Fuelwood efficient stoves: USD 6 – 8; with an average durability of 5 years
- LPG stoves: USD 107; average durability 7 years
- Biogas stove (including digester infrastructure): USD 912; average durability of 20 years (of the expensive and more robust digester infrastructure)
- Electric stove and electric mitad: USD 20 – 63; with an average durability of 7 years.
- Programme cost. The team estimated the cost of the programme on a per stove basis. The calculation includes costs for product development and testing, training of manufacturers, promotion of the technology, administrative overhead, programme evaluation, and follow-up. The actual costs have been evaluated based on the experience of implementing organizations such as the Ministry of Water and Energy and GIZ and set at nearly USD 30 per stove on average. The programme costs have been accounted for as operating costs.
- Fuel cost savings. In order to determine fuel cost savings, the team compared average fuel expenditure before and after a technology change. The savings have been accounted for as (negative) cost.
Without accounting for the potential benefits for users of more efficient stoves, the cost of implementing the stove scale-up would be positive, e.g., around 8 USD/t CO2e for fuelwood-efficient stoves. Including the benefits, however, the cost becomes negative (money-saving over their lifetime) for most stoves types, with the figures ranging from USD -21 to USD -14. The only notable exception is the abatement cost for LPG stoves, which remains positive at USD 120, due to the (currently) more expensive fuel.
The cost estimate also confirmed the maximum scale-up assumptions ex-post: the stoves that deliver the highest negative cost, i.e., net savings, were estimated to have the highest scale-up rates (e.g., fuelwood-efficient stoves) and stoves with positive cost the lowest rate of scale-up (e.g., LPG stoves).
Since efficient stoves are such a significant abatement lever, the STC conducted a detailed analysis of their potential, the implementation cost, and dissemination models. For the most important results, please refer to the summary of the detailed analysis in the concluding chapter of the main part of this report.
Forestry lever 5 – Large- and small-scale afforestation/ reforestation and area closure
Afforestation, reforestation, and area closure measures provide additional sequestration opportunities. The total abatement potential for the year 2030 comes to around 32.3 Mt CO2e, with afforestation contributing 21.5 Mt CO2e and reforestation 10.8 Mt CO2e.
The calculation of this potential is based on the following data and assumptions:
- Afforestation/reforestation area. Based on consultations with forestry experts, existing afforestation/reforestation projects, and discussions in the STC, it was assumed that 2 million hectares of pastureland will be afforested up to 2030. At the same time, Ethiopia will reforest 1 million hectares of degraded areas.
- Sequestration rate. The sequestration rate for both afforestation and reforestation was set at 10.75 t CO2e/ha/year, a number directly taken from the afforestation/reforestation CDM project in Humbo.
Abatement cost adds up to around 5 USD/t CO2e:
Planting material. Planting material costs 300 USD/hectare and is accounted for as CAPEX with an amortisation period of 30 years (based on GHG standard methodology for afforestation/reforestation).
- Assumed that one nursery, costing USD 50,000, will be needed for every 5,000 hectares. Since a total of 30 nurseries will be needed, this amounts to a CAPEX investment of USD 1.5 million that will amortize over 30 years. A nursery also has operating costs of USD 10,000 per year. In addition, the team estimated USD 1 million in operating expenditures for annual research and development activities.
- Operating cost for afforested/reforested areas. The management and care for afforested/reforested areas is – in consultation with experts – assumed to cost around 30 USD/ha/year.
- Programme cost and additional operating expenditure. A programme cost of around 9 USD/ha/year is incurred over the first three years of afforesting/ reforesting. Other operating expenditures include monitoring costs (around 3 USD/ha/year) for all afforestation/reforestation areas, which was computed based on experiences from the Bale project.
- Economic income effect. Sustainable forestry creates an income from timber and non-timber products, which has been estimated to be around 7 USD/ha per year (based on a possible value of 14 USD/ha/year as evaluated by forestry experts and a realisation factor of 50%).
Forestry lever 6 – Forest management
Forest management boasts an abatement potential of nearly 10 Mt CO2e in 2030, with management of forests contributing 6.5 Mt CO2e and management of woodlands 3.2 Mt CO2e. The abatement potential of these two levers was calculated in a very similar way, albeit using different assumptions on the following parameters:
- Projected area coverage. Based on interviews with experts, experience from existing forest management projects, and discussions in the STC, the area for the management of forests and for the management of woodlands was set at 2 million hectares each.
- Sequestration rate. Management of forests has a sequestration potential of 3.24 t CO2e/ha/year as international benchmarks indicate. Assuming that the management of woodlands has about 50% of that impact, the potential for this activity is around 1.62 t CO2e/ha/year.
These assumptions result in an abatement potential of 6.5 Mt CO2e from the management of forests and 3.2 Mt CO2e from the management of woodlands.
Abatement costs are around 1 and 2 USD/t CO2e for the management of forests and woodlands respectively:
- Planting material. The direct cost of planting material will amount to around 30 USD/hectare. It is accounted for as CAPEX with an amortisation period of 50 years (based on standard GHG methodology for forest management).
- Here it is assumed that one nursery, at the cost of USD 50,000, is needed for every 50,000 hectares. For a gradual scale-up, four nurseries will be needed, amounting to a CAPEX investment of USD 200,000. A nursery also incurs an operating cost of USD 10,000 per year. In addition, operating expenditures of USD 1 million were taken into account for annual research and development activities.
- Operating cost for afforested/reforested areas. The management and care for project coverage areas cost 2 USD/ha/year.
- Programme cost and additional operating expenditure. A programme cost of around 4 USD/ha/year is incurred over the first three years for the management of forests (50% of the cost for afforestation/reforestation) and 3 USD/ha per year for woodlands (total programme cost of 10 SD/hectare). Other operating expenditures include monitoring (1 – 2 USD/ha/year) for all areas.
- Economic income effect. Sustainable forestry creates an income from timber and non-timber products, which has been estimated to be about 3.50 USD/ha per year (50% of benefits assumed in afforestation/reforestation).
Source: CRGE, November 2011