$567.54 to offset a tonne of CO2?

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Comment by Andrew Barson on April 4, 2009 at 7:56pm

Well picked up Nils!

Lee - Nils is right, you've miscalculated. Each kWh of electricity used in NSW produces 1.06 kg of CO2e, so you're producing 22.8 tonnes not 2.28 tonnes.

The general question still holds though, is it better to pay $57 for each tonne of CO2 you've produced or pay for good quality offsets?(which you can get for just under $20 per tonne at this size)

I think it's important to realise that paying for GreenPower increases the demand for Renewable Energy Credits (RECs) that are generated by renewable energy projects, which in turn can help get renewable energy projects over some investment barriers, but it doesn't necessarily mean that the electricity your using is carbon neutral. (also most of the demand for RECs stems from the 20% renewables target rather than greenpower buyers)

Why? It's a bit complicated, as you need to look at the scheduling of electricity generators based on price points throughout the day and your usage times. Basically, when wind blows and wind power enters the grid, the hydro plants, then the gas power plants are the first to shut down as they are more expensive than wind and coal. When you're using electricity during off peak, it is only the cheapest power stations (coal) running. In summary, you're buying wind and using coal.

Once the emissions trading comes in to play: we will have one emissions target for Australia, which includes all our electricity generators. The extra renewable energy you're buying will help Australia reach its target, but if the target is legislated, we would probably have reached the same target anyway.

The way I see the question is: do you want to pay ~$52/tonne CO2e to invest in renewable energy in Australia or to pay $20/tonne to invest in renewable energy projects in developing countries?

My tip: Invest the $1200 in energy efficiency measures in your office, starting with all the measures with a payback under 3 years, and then moving to the more expensive measures. These measures will reduce your power bills, and then you can choose to invest that money in further energy efficiency, GreenPower or offsets.

Comment by Nils Davis on January 28, 2009 at 10:23am

I did a quick calc and I think I see your problem - I think you're responsible for more like 22 tonnes of CO2, not 2.2 tons. According to the FAQs on this page from the Oak Ridge National Lab, each kWh is worth about 2.3 pounds, or 1 kg, so 1,000 kWhs is about a tonne of CO2. At 22k kWhs, your yearly CO2 footprint is about 22 tonnes, and the cost per tonne of the green option is about $57.

Now, I've heard that the cost of CO2 in a cap and trade system will probably come out at about $80/ton (U.S. units this time), so you're getting a better deal than it first appeared.

Comment by Lee Stewart on January 23, 2009 at 3:07pm

Nic, Thanks for your comments and yes I agree with you and the first thing we are doing in the office is doing everything we can to limit our power consumption. I also agree a bit baffling and we will be watching this space closely and maybe one day we wont have to offset at all...

Comment by Nic Moodie on January 23, 2009 at 2:57pm

Yes Lee and others it’s all a bit baffling I agree.

(Mostly) We all accept that reducing anthropomorphic carbon levels are important and voluntary offsets are certainly part of the solution, but there’s more at stake then simply dealing with your company’s carbon footprint.

Most significantly there just aren’t enough good quality carbon offsets available across the market to offset anywhere close to the amount of CO2 equiv gasses required to avoid the high risk scenarios of climate change.

With green energy, as I understand regardless of the provider, if demand exceeds supply then providers must invest in actual onshore renewable energy infrastructure to meet that demand. So every 100% green energy purchase is driving the levels of renewables higher and economies of scale start to come into play.

Also there’s a variety of offsets on the international market, many based offshore in developing countries, and in the case of some forestry offsets for example there’s the risk of further exacerbating equity issues around food markets from pressure on agricultural land. There is already a food crisis under the weight of our developing interest in bio-fuels.

Then there’s the investing in Australian green industries issue and the clear statement of consumer demands which shouldn’t be underestimated.

I would suggest best responsible energy practice would be to reduce energy use through efficiency measures, then green power and finally offset …

But as you can see there’s no simple answer.
Make informed decisions about your offsets.

But maybe it’s good to remember that if we were all using low carbon intensity renewables, we wouldn’t have to offset at all...?

Comment by James Swanston on January 23, 2009 at 12:39pm

Hi Lee, I've just been looking at some carbon offset schemes myself and the prices I am getting told are around £8-10 (so around AUD20 per tonne offset) via accredited schemes... It's a real shame that the scheme that has the lowest carbon footprint is way above the cost of normal electricity options. Perhaps over in the UK, it is easier to find electricity schemes that come closer to normal price points. James

Comment by Lee Stewart on January 22, 2009 at 8:21am

Michael, Thanks for your comments and yes maybe we should be looking at other investment options in order to get the most out of the $1200. From my very basic calculations we can offset 45 tonnes of CO2 but maybe we should look at using those funds to drive energy efficiency as I believe that offsets should be the last resort.

Comment by Michael Parker on January 21, 2009 at 3:17pm

Congratulations on looking into a task that most of us have considered but possibly never actioned. It does pose an interesting question - assuming the cabon offset pricing is correct and it deilvers what it is intended to do. Also are there other investment options to be considered with the $1200 commitment that has the potential to have an even greater positive impact to climate change?

Comment by Ewan Palmer on January 21, 2009 at 11:20am

Another question that pops into my head after reading this post is - are the carbon offsets that people are peddling completely legit??

Carbon offsetting has always seemed overly cheap too me...

Comment by Marcus Lam on January 20, 2009 at 8:33am

An interesting discovery. Many people just choose the option they assume is best. Often, we're too lazy to seek alternatives. It's important to stay open-minded. Let's perform more calculations to see which choice sustains our environment best.