Greenhouse gas emissions control in the forestry sector

GREENHOUSE GAS EMISSIONS CONTROL IN THE FORESTRY SECTOR EME*EM Todd M. Johnson and Julian Lampietti with Lars Blomkvist and Xu Deying November 1994   CHINA Issues and Options in Greenhouse Gas Emissions Control Greenhouse Gas Emissions Control in the Forestry Sector SUBREPORT NUMBER 6 by Todd M. Johnson, Environmental Economist, The World Bank Julian Lampietti, Consultant, The World Bank Lars Blomkvist, Senior Forester, SGS Silviconsult and Xu Deying, Professor, Forest Ecology and Environment Institute, Chinese Academy of Forestry November 1994 Supported by the Global Environment Facility  The views expressed herein are those of the authors and do not necessarily represent those of the World Bank. Copyright 1994 Additional copies of this report may be obtained from The World Bank Industry and Energy Division China and Mongolia Department East Asian and Pacific Regional Office 1818 H Street, NW Washington, DC 20433 OTHER SUBREPORTS IN THIS SERIES: Estimation of Greenhouse Gas Emissions and Sinks in China, 1990, August 1994. Report 1. Energy Demand in China: Overview Report, February 1995, forthcoming. Report 2. Energy Efficiency in China: Technical and Sectoral Analysis, August 1994, Report 3. Energy Efficiency in China: Case Studies and Economic Analysis, December 1994. Report 4. Alternative Energy Supply Options to Substitute for Carbon-Intensive Fuels, December 1994. Report 5. Greenhouse Gas Control in the Agricultural Sector, September 1994. Report 7. Valuing the Health Effects of Air Pollution: Application to Industrial Energy Efficiency Projects in China, October 1994. Report 8. Potential Impacts of Climate Change on China, September 1994. Report 9. Residential and Commercial Energy Efficiency Opportunities: Taiyuan Case Study, September 1994, Report 10. Pre-Feasibility Study on High Efficiency Industrial Boilers, August 1994. Report 11.  FOREWORD This report is one of eleven subreports prepared as inputs to the United Nations Development Programme (UNDP) technical assistance study, China: Issues and Options in Greenhouse Gas Emissions Control, supported by the Global Environment Facility and executed by the Industry and Energy Division, China and Mongolia Department, of the World Bank. On the Chinese side, overall coordination for the project was managed by the National Environmental Protection Agency (NEPA), while the Chinese Academy of Forestry participated in the research for this subreport. This report considers the effect that forest management and tree planting has on China's net carbon dioxide emissions. It assesses the potential and net costs of carbon sequestration under various planting scenarios. Missions visited China in November 1992 and June 1993 for work on the scope of the study and the design of the forestry models. A major review meeting was held in Washington, DC in November 1993 to discuss the results and implications of the modeling work and the overall findings and conclusions. The forestry report was drafted and edited by Todd M. Johnson and Julian Lampietti with major contributions on the modeling and the final conclusions provided by Lars Blomkvist and Xu Deying. The authors would like to thank the Chinese Academy of Forestry in Beijing, Hari Eswaran from the US Department of Agriculture, Stephen Boyce from Duke University, and Keith Openshaw, a consultant to the World Bank, who prepared a background report and offered significant help with the conclusions of this study.  ii CURRENCY EQUIVALENTS 1 US$ = 4.7 Chinese Yuan (1990) WEIGHTS AND MEASURES hectare =104 M2 = 2.47 acres 1 ton fuelwood (air dry) = 0.54 tce ABBREVIATIONS AND ACRONYMS C - carbon CO2 - carbon dioxide FGHY - fast-growing high-yield forestry plantations GEF - Global Environment Facility GHG - greenhouse gas IRR - internal rate of return MAI - mean annual increment mt - million (metric) tons NAP - National Afforestation Project NEPA - National Environmental Protection Agency of China NFPA - National Forest Planning Agency NPV - net present value OECD - Organization for Economic Cooperation and Development UNDP - United Nations Development Programme  iii CONTENTS 1. FORESTS AND GLOBAL CLIMATE CHANGE ..........................................1 2. BACKGROUND .......................................... 2 A. FORESTRY IN CHINA .........................................2 Forest resources .........................................2 Wood demand .......................................... 4 Afforestation ......................................... 4 Fast-growing high-yield (FGHY) programs ..........................................5 Management and production in Chinese forests ......................................... 5 B. ORGANIC CARBON ASSESSMENT .........................................7 Woody biomass ...........................................7 Soil carbon .......................................... 8 3. MODELING CARBON SEQUESTRATION .......................................... 9 A. NATIONAL MODEL ...........................................9 Structure of the model ..............................9 Uncertainty and use limitations ........................... 10 National model scenarios ........................... 11 Results of the national model ........................... 12 B. FORESTRY PLANTATION MODELS: FINANCIAL AND ECONOMIC ANALYSIS 14 Types of plantations ............................. 14 Results of the financial analysis ............................. 15 4. DISCUSSION AND CONCLUSIONS ............................. 20 5. REFERENCES .............................. 22 6. APPENDIX A: NATIONAL MODEL ............................. 24 7. APPENDIX B: PLANTATION MODEL RESULTS ...................................... 25  iv LIST OF TABLES TABLE 1. REGIONS DEFINED .............................................................. 2 TABLE 2. FORESTED AND POTENTIAL FOREST LAND IN 1988, (MILLION HA) ................... 3 TABLE 3. AGE PROFILE OF CHINA'S FORESTS IN 1988, (MILLION HA) ............................ 4 TABLE 4. WOODY BIOMASS (MILLION METRIC TONS, AIR DRY) .................................... 7 TABLE 5. AVERAGE SOIL CARBON TO ONE METER DEPTH .......................................... 8 TABLE 6. PLANTING ASSUMPTIONS (MILLION HECTARES PER YEAR) ............................. 9 TABLE 7. SENSITIVITY ANALYSIS .............................................................. 10 TABLE 8. MEAN ANNUAL INCREMENT (CUBIC METERS PER YEAR) .......... ................... 1 1 TABLE 9. CUMULATIVE AREA PLANTED UNDER THREE SCENARIOS (MILLION HECTARES) ... 11 TABLE 10. RANGE OF ESTIMATES FOR TOTAL SEQUESTERED CARBON (MILLION TONS) ....... 12 TABLE 11. STEMWOOD HARVESTED BY END PRODUCT (MILLION CUBIC METERS) ...... ....... 12 TABLE 12. STANDING STOCK BY AGE CLASS (MILLION CUBIC METERS) ......................... 13 TABLE 13. ANNUAL CARBON BALANCE (MILLION TONS) ................... ...................... 13 TABLE 14. PLANTATION SCENARIOS ('000 HECTARES PER YEAR) ............................... 15 TABLE 15. INTENSIVE PLANTATIONS: FINANCIAL ANALYSIS AND SEQUESTRATION COSTS.. 16 TABLE 16. EXTENSIVE PLANTATIONS: FINANCIAL ANALYSIS AND SEQUESTRATION COSTS. 17 TABLE 17. FUELWOOD PRODUCTION FROM FUELWOOD AND .................................... 17 TABLE 18. CARBON SEQUESTRATION BY PLANTATIONS, 1990-2020 (MILLION TONS C) ..... 18 LIST OF FIGURES FIGURE 1. CHINA'S FIVE REGIONS ............................................................... 2 FIGURE 2. FORESTED AND POTENTIAL FOREST LAND AS A PERCENT OF TOTAL LAND AREA . . .3 FIGURE 3. SOIL CARBON LEVELS .............................................................. 8  v EXECUTIVE SUMMARY i. Through afforestation projects, the planting of timber and fuelwood plantations, and improved management of open forests, it is possible to store carbon in trees and soil and thus reduce net GHG emissions in China. Carbon sequestration is maximized by planting high-yield and fast-growing species on good land, under good growing conditions, and by applying scientific management. If part of the production of fuelwood can be substituted for coal, for instance, in direct substitution or in power generation, the contribution of the forestry sector in China to net CO2 emission reduction would be even larger. ii. Two models are developed to study carbon sequestration in China's forests: (a) a national model to predict the forest carbon balance, and (b) a plantation model to provide information on the financial costs and benefits of forest management schemes. Both models are simulated for 30 years, starting in 1990. iii. The analysis of tree planting in China shows that a moderately successful large- scale afforestation program could sequester a cumulative total of 2.2 to 4.6 billion tons of carbon in woody biomass and soil over a thirty year period, or an average of 116 million tons carbon (mtC) per year. Under a highly successful scenario, the amount of carbon sequestered in the year 2020 would be 221 mtC. For comparison, China's GHG emissions in 1990 from all sources are estimated at 800 mtC. To achieve this level of carbon sequestration from the forestry sector, China would need to increase forested land by 4-5 million hectares per year between now and the year 2020, extend the use of fast-growing high-yield plantations, and broadly disseminate advanced silviculture techniques. This level of planting would increase the percentage of forested land in China from about 13 percent in 1990 to more than 20 percent by the year 2020. Although fuelwood plantations do not sequester much carbon on a net basis, they can make a contribution to GHG reduction by substituting regenerable biomass for fossil fuels. iv. A net cost analysis of carbon sequestration from forestry development finds that the following types of plantations in China are financially and economically attractive on a life- cycle basis even if GHG benefits are not considered: (i) intensively-managed fast-growing high-yield (FGHY) timber plantations on good land in most parts of China, (ii) extensively-managed timber plantations in South and Southwest China, (iii) improved open forest management regimes in South China, and (iv) intensively-managed FGHY fuelwood plantations in South and Southwest China. v. Afforestation and forestry management practices that have the potential for maximizing carbon sequestration at the lowest net cost should be the focus of government support. While State Forest Farms must play a major role in afforestation work in China, private sector involvement and funds will be needed. Policies to encourage both public and private investment in the forestry sector are needed in China, including improvements in rural capital markets, further price reform, clarification of legal rights, and liberalization  vi of foreign trade and investment policies. Technical assistance or technology transfer can also be important to further expand China's fast-growing high-yield plantation program, and to improve silviculture techniques, the efficiency of wood harvesting and milling, nursery management, and forestry research and extension.  1. FORESTS AND GLOBAL CLIMATE CHANGE 1.1 Increasing atmospheric concentrations of carbon dioxide, methane, nitrous oxide, and chloroflurocarbons cause changes in the earth's surface temperature. Carbon dioxide is the largest contributor to this change. Forests are prominent in the global carbon cycle and in the exchange of carbon between terrestrial ecosystems and the atmosphere (Tans et al. 1990 and Dale et al. 1991). Forest vegetation and forest soil account for 60 percent of the organic carbon stored on the Earth's land surface (Schlesinger and Waring, 1985). The potential for using forestry to sequester atmospheric carbon has been extensively investigated (Dixon et al. 1991, and Moulton and Richards 1990), including work on China by one of the authors (Xu 1993, 1993a). 1.2 Forests are both a sink and a source of carbon. Trees take up carbon from the atmosphere to build their structure and maintain their physiological processes and they store carbon in their woody biomass and release carbon through respiration and decomposition. Forest soils absorb carbon from decomposing biomass; they store carbon in organic matter, and they discharge it through respiration. Young forests rapidly accumulate carbon in stemwood and soil. Mature forests are generally in equilibrium, with carbon uptake equaling carbon release. The pool of carbon held in forests can be maintained by reducing deforestation and it can be raised by improving forest management and increasing afforestation. 1.3 The storing of carbon in woody biomass and soils --carbon sequestration-- can be a cost-effective means of reducing net GHG emissions in developing countries. 1 The key to low-cost carbon sequestration in developing countries is to take advantage of the financial and social benefits from forestry development. Under the right conditions, multi-use afforestation projects, the planting of timber and fuelwood plantations, and the management of open forests in China can yield positive financial returns, meaning that the cost of carbon sequestration from these projects is low. 1 Net GHG emissions is the sum of all emission sources minus the amount of carbon that can be captured and stored in plant biomass or soils.  2 2. BACKGROUND A. FORESTRY IN CHINA 2.1 In China, "forest land" often refers to administrative control of the land and can refer to land with trees and land without trees but available for planting. Forest land is therefore best separated into two categories: (a) forested land, and (b) potential forest land. Forested land has at least 30 percent crown cover, but includes forest fallow. Potential forest land contains degraded forest with less than 30 percent crown cover, and all lands designated for forestry purposes by the government. 2.2 China's forests can be separated into five regions (Figure 1). The following discussion uses these regional definitions. The largest of these regions is the Northwest, followed by the North, South, Northeast, and Southwest. Figure 1. China's five regions NE Nj . Region Provinces _Jn , '1. North Hebei, Shanxi, Anhui, r t- N w - \ ,' Henan, Shandong, Inner t-1 NW . '' '; - -' /--t-