Dr Peter Seligman #1: "The Bang for Buck Approach to CO2 Abatement"

Bang for Buck in CO2 abatement


Dr Peter Seligman (Bionic Ear engineer, Cochlear and Monash University, Melbourne, Australia).


[This is the text of a public  lecture by Dr Peter Seligman sponsored by the Yarra Valley Climate Action Group and given in the City of Banyule, Monday 6 April 2009. Dr Seligman discussed where you can invest your money most effectively to reduce your Greenhouse Gas (GHG) emissions - some of our favourite solutions do not bear up under his analysis. For the extremely effective POWER POINT SLIDE PRESENTATION  accompanying this lecture see the Attachment at the end of the lecture text ].

There is a lot of hype associated with being green and many of us want to do the right thing. But let’s make money as well!


We all want to be “Carbon neutral”. The old plutocrats want us to believe that we need to continue subsidizing their greenhouse polluting activities so that they stay rich at our expense. But we can reduce our own carbon footprint and make our own money as well.


If we are smart about where we invest as individuals and as a community we can reduce our carbon pollution of the atmosphere and inspire the rest of the world to follow suit.


This essay will give you the tools to assess the economic cost and payback of  CO2 abatement measures. Once you understand these principles you will be able to make choices that not only will make you richer but also will save your and the world’s environment.


It’s all the rage, to want to be “carbon neutral”. Only a limited range of options are available to the average citizen. There are compact fluorescent lights, hybrid cars, better insulation, solar hot water and solar electricity and carbon offsets. The list appears to end about there.

Of course our energy use goes far beyond our domestic activities and any attempt to be “carbon neutral” should include all the activities carried on, on our behalf – pro rata as members of society. This load includes the health system, infrastructure, defence, education shopping centres and manufacture of all the things we buy. So attending to one small part of the problem is really just putting one’s head in the sand.

To calculate one’s environmental impact for these activities is not easy, The range of activities is so large and varied that a broad brush approach is required. One way that this might be calculated is to look at the total impact of the country, its GDP and then one’s own proportion of the GDP. This is as fair a method as is practical and the result is surprising. You might be proud of your low power use. For an economical household, electrical power consumption might be about 150 watts per person. However per capita, in a country like Australia or the US, the primary power use is 12 kW (12,000 watts). Although this is a fossil fuel input measure, when converted into electrical units at a 30 % efficiency, it comes to about 4 kW of end use power.

Now with the means available to the householder, the generation of 4 kW of electricity from renewable energy is not easy. Domestic rooftop solar systems typically generate about 150 – 300 watts average (the usually quoted figure 1000 – 2000 watts is peak power and refers to the power in full sunlight at noon only). For a fully installed system, domestic rooftop solar power comes at a capital cost of about $100 per average watt (for reference, capital cost of a coal power station is about $1 a watt. Large wind turbines cost about $ 7 per average watt.) To supply your total needs from this kind of solar system would cost $400,000!, whereas to do via a community wind farm would cost $28,000.  It is a mystery that governments are subsidising domestic rooftop solar when much cheaper options are available.

So what is a responsible citizen to do? Of course conservation comes first – just using less is a good start. But once you have dealt with your house, and your car it gets difficult. 


Money equals carbon dioxide.


Spending money results in energy use – no matter what you spend it on

Nevertheless there are good and bad ways of spending money and this is an attempt at a guide to a better way.


1.         The effectiveness of CO2 abatement measures varies widely and can even be negative. It is not easy for a lay person to calculate. However there is a quick and robust shortcut - which I will describe, with examples, eg hybrid cars and LED lighting.


2.         Alternative energy generation is expensive and offsets look attractive. Why are they so cheap? I explain how some offsets are effectively a 50 year interest free loan that rips off the environment.


3.         CO2 Abatement is easily transportable to a more effective location, I give examples.


4.         Double dipping - fraud is rife. How two parties can both think they are being green, from only one actual abatement measure.


The capital cost of power plants


How much did the power station to supply the electricity to your home cost? I’m referring here your share of the value, not the complete station and I don’t mean a specific power station but an average or generic power station. If your place is an average, reasonably economical house, and the power station burns fossil fuel, the answer is about $300 – 500 per household.  Considering these stations last a long time, 25 – 50 years, it is a very small sum indeed. A typical fossil fuel burning and polluting power station of 1000 Megawatts costs about 1 billion dollars, only one dollar a watt. However, this essay is not about building cheap fossil fuel power stations. I mention this merely as a yardstick against the costs of alternative power sources – and what we are up against to replace them.


Now let’s ask the question about a rooftop photovoltaic (PV) solar system. The gross cost, excluding any government incentives is about $100/watt, or for a very economical house, $30,000 to supply the load. The capital cost of a windfarm, is about 7- 8 dollars/watt. So one could justifiably ask the question: why are governments all over Europe and many other developed countries so keen on subsidizing individual, small scale PV systems when the cost is so high? If you had to pay back the gross cost of a PV system, unsubsidised and at market rates, you could never do it.  The interest on the $30,000 would far exceed the cost of the electricity generated. Only a tax-payer subsidized system of rebates and feed-in tariffs based on gross electricity generated can make this personally “viable”.


True, a roof covered with solar panels can give a warm fuzzy feeling, but when the actual costs and returns in CO2 abatement are assessed, there a better ways of achieving the objective. To put it the other way, if maximising abatement is the aim, there are much more lucrative deals around.


Calculating the cost of CO2 abatement.


Apart from the capital cost of the abatement scheme, we need to calculate the amount of CO2 emitted to manufacture that scheme.


To illustrate, let’s start with the debate about the hybrid petrol/electric car. There are people who will claim that the extra technology in a hybrid car can never be justified – that it will use more energy to manufacture than it will ever save. The same argument can be heard about nuclear power, windfarms, domestic solar photo-voltaic arrays and so on. On the other hand, there will be the enthusiasts who will happily neglect all downsides and see it all as straight benefit. Obviously the answer lies somewhere in between.


To calculate the energy required to produce a hybrid car is a big job, which is beyond the scope of a lay person. It could form (and probably has) the basis of a PhD. However here’s a shortcut to the answer. The idea is this: Every country has a CO2 output which is closely linked to its GDP. Why not take that average CO2 output per dollar of money circulating in the economy as a yardstick of calculating the CO2 equivalent of the production of the vehicle?


At first such an approach sounds quite naïve.  Not all expenditure of money results in the production of the same amount of CO2. I’m sure you can think of examples. If you buy a painting for $50,000 it has negligible impact whilst the much targeted four-wheel-drive or SUV is at the other extreme. All true. Or is it? What happens to the $50,000 after you have parted with it? Does it go into a mattress never to be seen again? Most likely not. It doesn’t matter if it goes to an artist or to a dealer, it will inevitably be put to some unknown use.  Even if it just goes into the bank, the bank invests that money in some other unknown investment (for example for people to build McMansions), resulting for the most part in further consumption. So as that money diffuses into the economy, its CO2 impact can be quantified by the simple dollar value.


In using this approach, not all countries are of course equal. A good list is provided in Wikipedia http://en.wikipedia.org/wiki/List_of_countries_by_ratio_of_GDP_to_carbon_dioxide_emissions

Considering similar countries in groups, the USA and Australia produce on average about 0.5 kgCO2/$ of GDP or $2000 per tonne of CO2. China and Russia are at about 2.4 kgCO2/ $ of GDP whereas Japan, Germany, UK and New Zealand are at 0.3. Switzerland, France and Sweden do even better at 0.14, mainly though their extensive use of hydro and nuclear power.


You may want to consider these figures when you buy things. A cheap Chinese product may produce 20 times as much CO2 per dollar as a Swedish or Swiss product. However, since the prices of the equivalent products are very different, you will need to take that into account.


To return to the example of the hybrid car: I use numbers plucked from the Drive section of a Melbourne newspaper which tells me that a Honda Civic hybrid costs $A 11,000 more than a conventional Honda Civic and that the fuel consumption is 4.6 litre/100km vs 6.9 litres/100km (please address any correspondence to the Melbourne Age). The question is this: Does the reduction of fuel consumption from 6.9 to 4.6 litres/100 km justify the extra energy that was used in manufacturing that hybrid car?


I have personally no way of accurately calculating the energy used in the myriad of components in a hybrid car. I have even less idea of what will happen to the money paid to the workers who helped to assemble it or the sales and managerial staff of Honda. But I do have one tool at my disposal: the price difference. For a car manufactured in Japan (0.3kg CO2/$), the answer is $11,200 * 0.3 = 3360 kg, or about 3 tonnes of CO2.


The next question should be of course, how much CO2 will this car save? According to the information from the newspaper, it will save 2.3 litres/100km or, over 15,000 km, 345 litres/year.


Is this worth it? Well the next step is to work out how much CO2 that produces. The commonly quoted figure is 2.6 kg of CO2/litre. I do not use this figure because that is just the fuel delivered at the bowser. When exploration, production and refining are taken into account the efficiency is 0.85, so the more truthful figure is 3.05 kg of CO2/litre. By that figure the CO2 saved is 1052 kg or about 1 tonne a year. So CO2-wise the payback period is 3 years.


Now for the next question: is this good value? CO2 offsets are pretty cheap. The going rate, if you quickly survey the internet is about $30 per tonne. Why would you spend $11,200 more on a car to reduce your CO2 emissions by 1 tonne a year? Does it make sense?


The answer to this tricky question very much depends on the cost of fuel. Since nobody can predict this, I have plotted the cost of CO2 abatement vs petrol price (see Slide #25).


 The idea of this graph is to show how much it costs per tonne of CO2 abatement. At the current fuel price of about $ 1.5 per litre, CO2 reduction costs about $270 per tonne, considerably more expensive than carbon offsets (more about those later). On the other hand at $2.20/litre, CO2 abatement is not actually costing anything, you are saving money in doing it.


Another case study is our office lighting. We have approximately 100 fluorescent tubes in our office, in use for about 250 days at 10 hours/day. At 45 watts each (there is a loss in the ballast) they use 11.3 MWh/year. In Victoria at 1.4 tonne of CO2/MWh, that amounts to 15.7 tonnes of CO2 per year.


We have replaced these tubes with direct-fit LED arrays. These lights cost a horrifying $90 each or $9000 for the whole office. But they use 15 watts each instead of 45, saving 30 watts. Is this worth it? Using the carbon intensity shortcut, from the CO2 point of view, at 0.5 kg/$, each LED tube represents 45 kgCO2, or to fit the whole office, 4.5 tonnes. The CO2 payback time is 6 months. (The payback time would be longer, 30 months if we used the Chinese figure of 2.4 kg/$- the answer is somewhere in between).


Next, it is interesting to calculate the cost of CO2 abatement through fitting these tube replacements. At the current Victorian electricity price, of $0.15/kWh, the office cost saving is $1130/year for a capital cost of $9000. The simplistic calculation of financial pay back period is 8.3 years, assuming that electricity prices track interest rates. By that time, some 86.5 tonnes of CO2 abatement would have cost effectively nothing. Of course, electricity prices are likely to rise faster than interest rates, so that the payback period will be shorter.


You can do this kind of calculation for a wide variety of electricity generation CO2 abatement schemes. Here is a summary of the results of a few.


Energy saving measure

Life (years)

CO2 payback time (years)

Cost of CO2 abatement including cost of energy saved ($/tonne)

Remote area solar system (Mornington WA)




Compact fluorescent lamp (used 24 hrs/day continuously)




IRIS sealed nuclear reactor




Large Geothermal




Georgia USA nuclear power




Portland wind farm




Birdsville Geothermal




Hepburn Co-op wind farm




Cloncurry thermal solar




LED fluorescent tube replacement




Mildura power solar power




Domestic Solar/gas hot water service (HWS)




Gorgon CO2 injection project




CCS Otway basin




More efficient fridge




Hybrid car extra cost




Fairview coal bed methane




Rooftop grid connect solar PV system




Solar/gas HWS holiday house 10% occup




Shred money





The interesting thing about this table is that so many of the systems and appliances come out looking equally effective. In fact most of them actually save money whilst abating CO2 emissions. The standout exceptions are solar rooftop grid connect systems and hot water systems installed in houses that are not generally occupied. Amongst the poor examples are the CCS (Carbon Capture and Storage) carbon sequestration schemes.


Solar photovoltaic arrays


It is interesting to note that two apparently similar systems, a rooftop domestic system in a capital city and a remote are power system come out very differently in terms of effectiveness. Of course we cannot solve the world’s energy problems by putting in more remote area power systems but this is an illustration of the calculation method.

A typical 1 kW rooftop grid connect system costs about $13,000 and generates about 1300 kWh per year (a third of domestic requirements). At $0.15 /kWh that's about $200 worth of electricity a year. Simplistically, assuming interest rates track electricity cost, that means a payback period of 13,000/200 = 65 years. It is not going to last that long. Let's assume 20 years. Over that time it would save $4000 of electricity and 26 tonnes of CO2 (assuming interest rates track electricity cost and 1 kWh = 1 kg of CO2). So the cost of 26 tonnes of CO2 abatement is 13,000 - 4,000 = $9000 or $346/tonne. This is much simplified because I have not yet included the CO2 penalty of building the system.

As a counter example I will use the building of a 32 kW (peak) solar installation in the Kimberley. It is on the Mornington Wildlife Sanctuary, a property of the Australian Wildlife Conservancy. Mornington used to go through 37,000- 50,000 litres of diesel a year. Now they use 7,000, so they are saving at least 30,000 litres a year, which has to be trucked in. They save around $80,000 dollars a year. The gross cost of that system was about $800,000 so the payback time is 10 years. However, if it lasts 20 years, by that time they will have saved $800,000. Diesel accounts for 2.9 kg CO2/litre but once you take into account refining and transport that's about 3.3 kg CO2/litre so they will save 100 tonnes a year. If it lasts 20 years it will have saved 2000 tonnes. To save this will not cost money, they will save $800,000, assuming diesel price tracks interest rates, an under-estimate as it will probably increase much faster. They will have saved $400 for each tonne of CO2 saved.

To refine the calculations a little, let's look at the CO2 penalty in building these installations. The Australian economy produces 0.5 kg of CO2 for each $ of GDP. So the rooftop solar created about 6.5 tones of CO2 (from $13,000). The Mornington scheme created 400 tonnes from $800,000.

So if we subtract these amounts from the CO2 abated, we get: Domestic rooftop solar saves 26 - 6.5 say 20 tonnes, for $9000 or $460/tonne CO2 of abatement. Mornington saves 2000 - 400 say 1600 tonnes, whilst saving $800,000, which is negative $500/tonne "cost" of abatement.



The method of using carbon intensity to calculate CO2 payback periods and costs of CO2 abatement is of course very easily criticised. There are scientific methods which are more accurate but here’s the catch. Consider an aluminium component. Do we know the source of the aluminium? If it is recycled, its CO2 loading is far less than freshly mined and refined aluminium. There is the question of where the electricity was generated. If it was generated in Tasmania, the CO2 loading is small since it is mostly hydro. In Victoria it comes from the dirtiest source in the world. But now that Victoria and Tasmania are linked by a cable, does that still hold true? In fact, it is quite impossible to pin down the exact CO2 attributable to a piece of aluminium. The dollar carbon intensity method could be the most accurate.


Finally, in the table I have included the effect of simply withdrawing money from the economy. This is listed under the title “Shred the money”. Whilst this is not the most effective way of CO2 abatement, nor the most pleasant, it is certainly effective. This is already occurring in the advancing recession. The CO2 abatement will be quite noticeable. In fact there is the danger that some countries will meet their targets, inadvertently, by this means alone.


A good example of the effect of frugality is Cuba. Don’t mistake this statement as a plug for communism. However, as the New Scientist heading put it: “Cuba flies the lone flag for sustainability” (page 10, 6th October 2007). The article explains that only Cuba provides a decent standard of living without consuming more than its fair share of resources. Of course this is not entirely voluntarily, but nevertheless it demonstrates that it is possible.


Rebates and Renewable Energy Certificates


Often governments offer rebates for the public to install solar systems, both hot water and photovoltaic. At present, in Australia, the system is one which gives a fixed dollar rebate rather than a percentage, thus encouraging people to put in the minimum sized system, to maximise the proportion of the cost borne by the government. Further constraints are that the family income must be below $100,000 per annum, discouraging the people who are most likely to be able to afford it.


Several Australian state governments are now also offering Feed-In-Tariffs, (FITs) in which the electricity can theoretically be sold back to the power utility at a much high price than they normally pay. This sounds good until you realise that in all states apart from the ACT, the FIT is paid only on the excess over your own consumption and that furthermore, systems which are large enough to provide an excess, over 2 kW peak, are excluded.


Then there are Renewable Energy Certificates (RECs). This is an arrangement where power companies are able to buy "green" energy from the public. Each REC is equivalent to 1 MWh of green power. The argument currently goes: that those who put up solar installations, by selling their RECs are in fact selling their "greenness" to whoever is buying green energy. Of course the panels are on your roof, but nevertheless, both of you can't be green. For you to remain "green", the argument goes, you have to hold the RECs, not sell them.


The way I see it, the roof top solar system, whether hot water or photovoltaic is a joint venture between three parties:


The provider of the system

The government (or taxpayer) which pays a usually substantial rebate

The public, who wish to pay extra to buy “green” energy.


Since the outcome of the benefit is shared by all, it is interesting to ask who has paid for this benefit. The taxpayer has paid a huge slab, through the rebate, the purchaser of green energy has paid some as well, and the provider of the system, the home owner, can come out of it almost cost free, albeit after some considerable time. From the home-owner’s point of view its seems good value for money, but the tax paying community has had to bear the cost for a very inefficient scheme for CO2 abatement, leaving less resources for much more efficient abatement schemes.


Scams and lack of Australian Government action

There is a proposal to remove the $8000 rebate for solar electric installations and replace it with a system by which the public receive a similar financial benefit in additional Renewable Energy Certificates, RECs . Under this scheme 5 times as many RECs will be issued to you as the amount of CO2 you save! If this goes ahead, the RECs scam means that well meaning people who install such systems will be able to  sell their "green" electricity 5 times over. The RECs are given to you as soon as you install your rooftop PV system, even though the power will be generated over the next 15 years. The beauty of it from the government’s point of view is that it costs nothing. The coal fired power generators can buy the RECs and sell them as green power to unsuspecting would-be greenies, thus costing the power companies nothing and leaving them free to pollute just as before.

In spite of all this, it is largely irrelevant. Remember, that each Australian is responsible for about 4000 watt of end use energy. If every household in Australia installed a 1kW array (1000 watts peak = 140 watts average - say 35 watts per person) we would reduce our GHG emissions by only 1% .

We need to spend money on schemes which give the maximum bang for buck. For example at present the Hepburn Community Wind Park Cooperative is languishing for lack of funds. This scheme would deliver power at $8 capital cost per installed average watt, compared to $100 for rooftop solar.

On a larger scale, geothermal power probably represents Australia's most promising opportunity to rid itself of fossil fuel electricity generation. The Cooper Basin, near the junction of Queensland and South Australia is a geothermal hotspot. The problem is that it a 100 km from the grid.


 A solid DC power link from South Australia to Queensland would pass though the Cooper Basin, making geothermal power there lucrative. This link could pay for itself simply by the electricity price differential between Qld. and SA in two years, even without a geothermal power station. Furthermore, a link to the interior would lend itself to further opportunities for efficient large scale solar to deal with peak power loads.

More on this is on http://peakenergy.blogspot.com/2008/09/national-electricity-grid-for-australia.html

These are the kinds of schemes I was hoping the new government would initiate.


Transporting negative CO2


To maximise bangs for the buck of CO2 abatement, you don not have to place the abatement scheme on your house or even in your local community. The scheme may be far more effective elsewhere.


To explain the concept of transporting negative CO2, I shall use some examples. A friend expressed the desire to go green and how good it would be to have solar panels on her house. Unfortunately she told me how her roof was quite unsuited to solar. I said “your son has a big roof facing north, why not put it on his roof?” But “I want to go green!” she replied. But here’s point: does the atmosphere know what roof the panels are on?  If your intention is to be green, the obvious tactic is to put the panels on the most suitable roof available; who owns the roof is not relevant. Of course there is the minor matter of whose electricity bill gets the benefit, but that’s an accounting issue.



As much as I would love to see solar panels on my house, it didn’t make sense. However, what if I were to move my solar array to a much sunnier place, say the Kimberley? And what if the electricity at that place cost 3 times as much as it does in Melbourne? Wouldn’t that make it a good proposition?  OK – people won’t be able to see the array on my house to show off how green I am.  But instead I supported the building of the solar installation in the Kimberley.  The WA government provided 55% of the capital cost.  In the example above, the rebate was effectively only 33%. The added bonuses are that the Australian Wildlife Conservancy reduce their diesel bill whilst I get a tax deduction.


You may notice, from what I said above that, by investing in a solar array in the Kimberley, I forfeited my free electricity. The array on my roof would have given me “free” electricity. Well at least at no further cost. But what if I invest my tax savings in an ethical managed fund? Even a modest return would get me the money I would save on electricity.



To illustrate in a different way, I will mention another friend’s household in British Columbia which uses 240 kWh per day (in contrast to our house 7 kWh per day). The electricity is used by a very inefficient heat pump used to heat the house. I was told however that that was OK because all the electricity in BC is hydro. But just across the border, in Alberta, the power is 85 % coal generated. So a more judicious use of power in BC could mean that power could be exported to Alberta, cutting total emissions of Canada overall. A very high value scheme would be to give the family a more efficient heating system. The abatement would come at $10/tonne CO2 even though BC has hydro.




Carbon offsetting


It is usual in considering the CO2 produced by driving to consider only the fuel used. There are carbon offsetting companies that offer CO2 offsets such as planting trees. In fact the CO2 due to cars is about three times as much as that due to the fuel burned in the engine, taking into account the principle mentioned earlier that CO2 actually produced is proportional to the dollars spent. Here are some figures from the automobile club the RACV magazine for a medium sized car travelling 15,000 km a year.


20 c/km fuel cost

50 c/km other costs


         15,000 km/year – 1,500 litres

         X by 3.05 to get kgCO2 = 4,600 kg

         (includes drilling, refining, transport)

         Car costs $1.20/km in non-fuel costs (RACV figure)

         Non-fuel cost $ 7,500/year

         CO2 = 0.5 * 7,500  = 3750 kg

         Total annual CO2:                                8.4 tonnes

         Typical offsetting company calculator: 4 tonnes



From these figures, it is not unreasonable to suggest that the actual CO2 contribution of a car is approximately double times that produced by burning the fuel alone.


Have you ever wondered why carbon off setting is so cheap? I certainly have. While stumping around trying to raise money for the solar system for the Australian Wildlife Conservancy I was thinking: Why we doing this? For only $1000 a year we could offset the 80 tonnes of CO2 a year put into the atmosphere by AWC’s diesel generator. I think I have it figured out…


Say you lend me $100. After a while you come back and say “what about my $100?” I reply OK, here’s $10 – just put it in the bank and in 50 years it’ll be worth more than $100.


Whilst a tree will remove a tonne of CO2 over its lifetime, isn’t that the same as the $10 for 50 years in the bank as a substitute for a $100 repayment? The global warming caused by the CO2 you generated this year will never be fully compensated by gradually removing that CO2 over the next 50 years- it is doing the damage now.


My suggestion is that you will have to offset approximately 10 times as much as the going rate to break even on CO2.


The much bigger picture


We tend to focus in our attempts at doing the right thing on our own activities, in particular our domestic activities. However so much of the energy we use is not directly under our control. This is the energy used in businesses, shopping centres, infrastructure, defence, the medical system, sporting events, hotels – a huge variety of ways. How does our own domestic used compare with that? Once again, the shortcut can give you a ballpark figure.


In an excellent presentation at MIT at the announcement of the Xprize for alternative energy solutions, Saul Griffith said he used 18 kW of power (average over a year) to run his life. A typical North American or Australian averages about 12 kW.  For those of you that are interested see Appendix. The MIT session on the Xprize for alternative energy solutions is well worth watching.



There is one thing that was glaringly obvious here. There are no quick fixes. Compact fluorescents and remote area power systems won’t make much of a difference in the face of 12 kW per person. Maybe Cuba has the key. Even with their 1950’s cars, if the whole world lived like that we would need just under one planet to support ourselves. It can be done with a high level of medical care and education, so the majority would be living far better than they do today.


At this point, I come back to the beginning, what are the best actions we can take to move in the right direction? I think the answer lies in using as much of our disposable income as we can afford in the most effective way. To me this means taking money that is invested in energy hungry industries putting it into investments which reduce impact. A good example is a community windfarm, geothermal power or a large solar plant.


If you want to take this really seriously, remember that you will need to go much further than your own domestic consumption. You will need to cover the full 4000 watts, or about 22 tonnes of CO2 per annum. Covering your domestic use is like covering your toe, rather than your footprint.


I am investing in the Hepburn Wind Coop see: http://www.hepburnwind.com.au/

From their prospectus you can calculate that, pro rata, $5000 is equivalent to 635 watts average. Our house uses about 300 watts (averaged over full year 24 hours a day). So that is about double our electricity use, heaps better than a wimpy grid connect solar, which would only provide about 140 watts at much greater cost.

According to the prospectus, Hepburn Co-op will pay a dividend of about 7%, so it would return $350 (pre tax) per year. On a 1 kW domestic rooftop array, you can expect to save about $190 per year of post-tax income. Financially there is not much difference. However four times as much electricity is being generated by the wind farm investment of $ 5000. Of course if you don’t qualify for the $8000 rebate, the financial return is very different indeed. Then you would  need $13,000 of investment to get a return of $190 – annually 1.5% for domestic solar PV.


Personal cost or gross cost?


A tricky decision is whether to cost your CO2 abatement  measures by the price you yourself pay, or the total cost. All alternative energy measures seem to be surrounded by a dense network of rebates and subsidies. Whether to consider societal cost or personal cost is a decision you have to make yourself.


In addition, you may want to try to include the market cost of CO2 (or carbon. 1 unit of carbon = 44/12 = 3.67 units of CO2, a factor often confused or neglected). At present in Australia the cost of CO2 is about $50/tonne, based on the cost of RECs and CO2 average of our electricity generating system. You may want to include this in the value of energy saved, if and when a carbon trading scheme is implemented.


Notwithstanding these uncertainties, I hope this essay is helpful in making decisions based on actual data, rather than simply the warm-and-fuzzy factor.





Each of us uses far more energy and produces more pollution than just our domestic use. It is clear that the part we cannot control, government, commercial and industrial use, is moving even more slowly towards reducing impact than many of us do as individuals. So if we want to have real impact, it is simply not enough to change to a few domestic habits and use energy saving devices. We need to do far more. What can we do?


Those who are in the fortunate position of having some money to invest, to get the biggest bang for buck, the points to consider are:


The financial payback period. This is the most conventional and least relevant assessment. A quick payback period does not necessarily lead to a good CO2 abatement outcome.

The capital cost per kW of renewable power generated (or fuel saved). This is certainly a more relevant means, but it does not ensure good value.

Total life cost of CO2 abatement of the measure. This is the basic point of this essay.




1.         Calculations



Cost of abatement =   Financial cost of system – money saved over life of system

                                     Embedded CO2 of system – CO2 saved over life of system


Embedded CO2 of system = cost of system / CO2 intensity

(in $/tonne for particular country)


CO2 saved over life of system = CO2 saved per year * life of system.


CO2 saved per year = renewable kWh generated or saved per year * kg/kWh (Australian average is 1 kg/kwh)


This is the method of comparison I used in the table of abatement measures.


2.         The GHG targets and discussion


The Government says we have to turn a big ship around and that a seemingly small reduction of 5% of greenhouse gas emissions by 2020 actually represents a large reduction in the face of 45% population increase. However that is not my concern, and is irrelevant to the environment. My point was that I do not see evidence of action being planned to achieve those targets.

It appears to me that government has 3 options available to encourage (or force) change:
1.    The Law. This would be the least popular but interestingly people have accepted it re water use.
2.    Financial incentive. Make it cheaper to do the right thing.


3.    Direct action. Build the required infrastructure yourself eg The Snowy Mountains Scheme.

However what is discussed in the press is mainly targets, not how we are going to achieve them.

An exception to this is the debate on domestic rooftop solar electricity which gets lots of publicity – and is close to irrelevant..

3.         How much power does an Australian use?


I thought I would try the carbon intensity method to see how closely it matches this figure For example our house uses about 2800 kWh of energy in a year so we average about 300 watts of power. At a generating efficiency of 30%, that is equivalent to 1 kW at the power station. We also used 40,000MJ of natural gas, which is equivalent to 1.25 kW.
We used 1500 litres of petrol, which at 10 kWh/litre comes to 15,000 kWh/year equivalent to 1.7 kW. So our household is averaging about 4 kW of power (day and night). However that's not including the flying we do, the power used at work, the junk we bought and production of the food we eat. Calculating from our rate of spending, we are producing 50 tonnes of CO2 a year. The Australian equivalent of CO2 to kWh is about 1 kg CO2/kWh (elec). So that's 50,000 kWh/year at a rate of  about 5.7 kW power. Again assuming 30% efficiency, that's 19 kW. Total for the two of us is so far is 23 kW, about 11.5 kW each. Spot on! He said 12 kW for the average American/Australian.










[1] Here we are talking about the gross cost of the systems (to the community at large), The RECs, rebates, Feed-in-tariffs and tax deductions are left out of the discussion. They simply determine who is paying what part of the bill.

Gideon Polya,
Apr 8, 2009, 7:54 AM