Re/Action on Climate Protection

Basic GHG reduction economics

One often hears the concern that GHG reduction is "too expensive" or will "wreck the economy". Are these claims true? In order to determine whether a measure is cost effective, or makes sense economically, a basic financial analysis must be done.  There are some tools available to help with this analysis. In order to use these tools, basic familiarity with spreadsheet software such as Excel is useful.

There are two types of investments in GHG reduction: 1) in measures that reduce demand for GHG generating energy, such as energy efficiency improvements; 2) in measures that replace GHG generating energy, such as solar photovoltaic panels. These measures avoid the emission of GHGs. Thus the investment in these measures can be expressed in "cost per unit weight of GHGs avoided over the life of the measure". In order to calculate the weight of the GHG avoided, a number called the "emission coefficient" is used. For example, in California, our statewide emission coefficient for electricity is 0.73 pounds of equivalent CO2 per kilowatt-hour. This just means that every kilowatt-hour of electricity that is used results in the emission of the atmospheric equivalent of 0.73 pounds of carbon dioxide from the generating power plants.

For example, suppose you replace a 100 watt incandescent lamp with a 20 watt compact fluorescent (CFL). Assume that the life of either bulb is 10,000 hours. Over the lifetime of the two lamps, the incandescent will use 1,000 kilowatt hours and the compact fluorescent will use 200 kilowatt hours. Using the emission coefficient, using the CFL in place of the incandescent will result in avoiding the emission of 387 pounds of carbon dioxide over the 10,000 hour lifetime. If the difference in cost between the two lamps is $10, the cost of the avoided carbon dioxide is approximately $50/ton. This metric can be used to compare cost-effectiveness of different measures.

In both demand side reduction measures and supply side measures, financial models are used to compare the investment in efficiency or new renewable generating capacity to other types of investments. The simplest financial model is known as "simple payback." This is a calculation of the length of time it takes for the savings from a measure to accumulate to the initial cost of the measure. For example, if a measure costs $100, and saves $10/month, it will "pay for itself" in 10 months. In our incandescent vs. CFL example, the CFL would pay for itself in approximately 1200 hours of operation if the electric rate is $0.10/kWh.

This model does not take into account two important factors: the future value of money and utility rate escalation. These to factors are critical to take into account for an accurate estimation of the financial implications of investment in GHG reduction. We will discuss financial modeling that includes these factors in another post.

Action on Climate Protection

Hello, Climate Protection Campaign is launching our blog. This blog is intended to stimulate discussion about what can be done to reduce greenhouse gas emissions. We are currently working on projects at the local level, but we advocate action at all levels: local, state, federal and international.

What we want to do in this blog is to discuss solutions. We want to know what is working elsewhere in the world...and we want to share our experiences with what is working here in Sonoma County.

Although we will post articles on science and links to basic climate science, our aim is not primarily to discuss the science of global warming and climate change. We are not climate scientists, but we view the science of global warming as basically settled. We have adopted and endorse the findings of the IPCC (Intergovernmental Panel on Climate Change), which are that:

• The planet is warming
• Most of the warming in the past 100 years is caused by humans (anthropogenic)
• The human activities most responsible for warming are emissions of greenhouse gases (GHG) and deforestation.
• Emissions of GHGs that are causing global warming are primarily from the combustion of fossil fuels.
• Significant reduction in GHG emissions is necessary to prevent dangerous changes to the global climate.

In addition to the findings of the IPCC, our view is that meaningful reductions must be accomplished as quickly as possible in order to stabilize the level of atmospheric CO2 as low as possible.

We are looking forward to engaging in discussion with you about how to solve the climate crisis.