III Low Carbon Scenario for LULUCF Brazil GHG Emissions Profile
Low Carbon Scenario 1. Reduce Deforestation by 70% (83% compared to historical average) 2. Large Sequestration opportunities through forestry activities Other smaller mitigations opportunities: 3. Livestock emissions 4. Agriculture emissions
1. Drastically reduce Deforestation 1. Act on Primary Causes: reduce need for new land Free-up land for crop expansion by increasing low productivity of livestock 2. Complementary Forest Protection : Protect against illegal cuts
2. Large Sequestration Opportunities 1. Forest Recovery up to full Legal Reserves compliance 2. Plantations for Renewable Charcoal for Steel Industry Capture of up to 1/3 of current emissions from deforestation Trade-off between Legal Compliance and Risk of Carbon Leakage More sequestration but less land remains available for crop expansion and therefore risk of more pressure to deforest elsewhere
Large Sequestration Potential Legal Reserves Rain Forest and Cerrado APP (Riparian forests) Eucalyptus plantations Carbon sequestration rates (tco2/ha/year)
Reduce Need for New Land : A Challenge Several Shocks to be absorbed to avoid carbon leakage Low Carbon Scenario: certain mitigation options requires additional land Shock 1: Absorption of excess land demand in reference scenario requires to free 16.8 million Ha additional land Shock 2: Elimination of non-renewable charcoal by 2017 and increase participation of renewable plantations for charcoal to reach 46% for steel production requires 2.7 million Ha additional land Shock 3: Expansion of Sugar Cane for Brazil to supply 15% of the ethanol required for a Mix of 20% of ethanol in world gasoline requires 6.4 million Ha additional land Shock 4: Recovering of the environmental liabilities of legal forests, requires to free 44.3 million Ha additional land Combined effects : + 70 million Ha to be absorbed Confidential. Not for citation 6
Herd Herd size size per per system system (head) (head) Increase Productivity of Livestock to free-up land for expansion of other activities to avoid deforestation 250000 200000 150000 100000 Reference Low Carbon Scenario 50000 00 2009 2012 2015 2018 2021 2024 2027 2030 Year Year Complete cycle - - degraded pastures Complete cycle - - extensive pastures Extensive cow-calf + + growing w/ w/ supplementation + + finishing on on Integrated Crop-Livestock Extensive cow-calf + + growing w/ w/ supplementation + + finishing in in feedlot
1 a 2,0 ua/ha/ano
Without Policies to to increase Livestock Productivity
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Reference and Low carbon Scenarios Summarized Results BRAZIL (Million of Hectares) Land use Reference Scenario Low Carbon Scenario 300 275 250 225 200 175 150 125 100 75 50 25 275 SOYBEAN 250 CORN 225 FOREST 200 BEAN 175 SUGAR- CANE 150 RICE 125 COTTON 100 PASTURE 75 50 25 REFORES- TATION SOYBEAN CORN FOREST BEAN SUGAR- CANE RICE COTTON PASTURE - -
3) Livestock: Alternatives for mitigation of GHG emissions Improvement of forage quality Genetic improvement of the cattle herd Expansion of the feedlot sector Recovery of degraded pastures Adoption of integrated systems (Crop-Livestock, Crop-Livestock-Trees) Increased stocking rates Decreased demand for grazing lands Improvement of performance indices Decreased age at slaughter Decrease in cow herd size needed to supply calves Decrease in greenhouse gas emissions
Emissions 10 6 t CO 2 -e Projected growth of Livestock GHG emissions Baseline and Low-Carbon scenarios 275 270 Baseline Low Carbon 265 260 255 250 245 240 235 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Year
4) Agriculture Greenhouse Gases (GHGs) Emissions from Agricultural Systems I. Soil Emissions II. Emissions from fossil fuels CO 2 Changes in soil C stock. N 2 O Fertilizer, crop residues and soil C losses (N 2 O from soil N mineralization ) CH 4 Biomass burning and waterlogged rice CO 2 eq Based on the GHGs generated from diesel oil combustion to produce the energy required for field operations (fertilization, disc plough, seeding ). Zero Tillage
Projected growth of Agriculture GHG Emissions Baseline and Low-Carbon scenarios Soil GHGs emissions (CO 2 eq) (million ton) 100 80 60 40 20 Avoided emissions - CO 2 eq GHGs emissions under the Low Carbon Avoided emissions from 2009 to 2030: 207 million ton CO 2 eq 0 2010 2015 2020 2025 2030
GHG emissions balance Reference MtCO2e./yr Low Carbon MtCO2eq. Net Balance Emissions from Land use change (deforestation) Emissions from Land use Sequestration 800 600 400 200 0-200 700 600 500 400 300 200 100 0-100 -200-300 Net Balance Emissions from Land Use Emissions from Land Use Change (deforestation) Sequestration Reduction of Deforestation: (-68%) compared to the Reference Scenario2010-2030 (-83%) in the Amazon Region compared to the historical average 1996-2005
Low Carbon Scenario Projections 2008-2030 MtCO 2 2,000 Reference Scenario +32% (2030) Energy 1,500 12% 5% 8% Transport 1,000 75% Waste Management 500 Low Carbon Scenario -49% (2010-2030) Land Use and Land Use Change 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Ethanol Exports displacing Gasoline Accommodation of marginal expansion of crops sharp drop, but effort to be renewed every year
Cumulative Emissions Reductions 2010-2030
PAUSE: Q&A AND DEBATE 3) What Constrains are there (Institutions, Capacity, Finance)? 4) Are there Trade-offs?
IV Economic Analysis - To inform the Decision Process
Inform the Decision Making Process Key questions Is there a low carbon option? Example: Cogeneration from Sugarcane Extracting condensing turbine, 90 bars What is the mitigation potential? 158 MtCO2e (7.5MtCO2/year) Does it make sense economically from a planning perspective? Would it happen spontaneously? Break-Even Carbon Price = +$8/tCO2 How much financing needed? YES: Marginal Abat. Cost = - $ 105 /tco2 (8% social discount rate) NO: Sector Expected IRR is 18% > 8% Incentive required = + $ 8 /tco2 Additional investment = + $ 35 billion (+$1.6 bi /year)
Social Costs and Private Cost of Mitigation Options for Deforestation More Productive Livestock Systems: are more capital intensive require financing induce additional financial costs request higher IRR than 8% social discount rate require incentive (Break-even Carbon Price) $7.00 US$/tCO2e $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- $(1.00) $6.04 $(0.48) Cost of Extension Services not yet accounted for 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 MAC 8% (Livestock Cost + Forest Protection) Break Even Carbon Price (Livestock Cost + Forest Protection) MtCO2e
Marginal Abatement Cost / Break-Even Carbon Price Curves 60 40 20 0-20 -40-60 -80-100 -120 2 1 4 3 6 78 5 12 11 10 9 13 16 15 14 1718 19 20 21 2930 28 22 23 24 2526 27 0 2000 4000 6000 8000 10000 12000 heat recovery sys steam rec. system sugarcane cogen. res. lighting Avoided deforestation + livestock: 6 billion tco 2 (2010-2030) MAC = -US$0.48/tCO 2 ECC = +US$5.6/tCO 2 optimizing traffic gas to liquid (GTL) windpower comm. lighting ind. solar thermal applications industrial lighting avoided deforestation + livestock energy efficiency NG vs. fuels furnace heat rec. recycling TL Brazil-Venez. Refrigerators combustion opt. electric motors landfill CH4 destruction no tillage cropping ethanol displacing domestic gasoline renewable charcoal rail + water vs. roads new refineries existing refineries residential solar heater ethanol exports bicycle lanes new ind. processes 400 300 200 100 biomass vs. other fuels Reforestation BRT 31 32 33 ethanol displacing domestic gasoline optimizing traffic renewable charcoal Selection criteria: MAC < U$50/tCO2e, (social discount rate 8%) or Other benefits would trigger implementation (transport, sanitation) existing refineries (energy integration) new refineries windpower residential solar heater electric motors biomass vs. other fuels ethanol exports investing in railroads refrigerator TL Brazil Venezuela new industrial processes commercial lighting -140 0 0 500 1,000 1,500 2,000 2,500 3,000-100 -200-300 -400 res. lighting heat recovery sys steam rec. system furnace heat rec. combustion opt. ind. solar thermal applications bike lanes BRT NG vs. fuels sugarcane cogen. gas to liquid (GTL) other energy efficiency measures Sensitivity Analysis: Oil price: +$40 to +$70 per barrel -500
Additional Financing is needed For Incentive (to finance Break-Even Carbon Price) For Investment Average Investment needed: U$ 22 billion additional per year (U$5bi/y for LULUCF) (National Investment = U$ 250 bi/year, FDI = U$ 30 bi/year) Not exorbitant, however new instruments are required
PAUSE: Q&A AND DEBATE 5) What Opportunities are there for the WBG to engage?