Using Markets for Woody Biomass Energy to Sequester Carbon in Forests

Although storing more carbon in forests should be part of an efficient mitigation program, it is unclear how to create effective incentives to make this happen. The literature largely has focused on giving landowners direct incentives to store carbon. This paper explores an alternative mechanism to increase forest carbon sequestration by creating a market for wood bioenergy. By raising the value of wood, the program encourages landowners to convert vast amounts of land to forest, which incidentally increases forest carbon. By providing an indirect subsidy on woody biomass, governments can give even more incentive to reward this carbon sequestration.