Biofuels and the time value of carbon: recommendations for GHG accounting protocols

The quantification of the carbon dioxide emissions impact associated with land-use change for biofuels production is complicated by the fact that the carbon costs from land-use change and the avoided emissions from substituting biofuels for fossil fuel in transport occur over an extended period of
time. Estimating the net carbon impact therefore requires a method for aggregating the increased and avoided emissions that play out over time into a single figure. The choice of accounting method can have a significant impact on the resulting net emissions measure for specific land-use options such as
biofuels production. This in turn will influence the relative desirability of different land management scenarios for a given piece of land. Traditional cost-benefit analysis regularly uses discounting to compare and aggregate monetary units over time. However, extrapolation of this approach to assess physical units of carbon dioxide emissions released or avoided in the future
is not straightforward. Selection of an appropriate discount rate for physical carbon units requires a consideration of multiple additional variables. These include rates of carbon accumulation and decay in the atmosphere and estimates of the marginal damages arising or avoided from changes in atmospheric carbon stocks.