From Envirowiki

If one is considering an energy saving measure or a renewable energy source, it is of interest to know, what the CO2 payback period is, not only in terms of dollars, but the CO2 that may have been emitted in creating the “green” measure.

Secondly it is of interest to know what you are getting in terms of “bang for your buck”, ie. how much is it costing per tonne of CO2 that is being avoided? Obviously it is best to minimise the cost for maximum effect.

It is very difficult to calculate the CO2 produced in making something, since many materials are involved and these materials are mined and transported and processed and put together with some parts being produced and then transported again.

However there is one fair statement you can make: as an upper limit, it can’t have required more energy to produce something that the cost of the energy embedded in the item.

Furthermore, we may need to consider the component costs of the item. Some are directly energy related: such as mining, transportation smelting, etc. Some are labour related. If a product is labour intensive to produce, you could say that its energy cost is less than that. But is it? Wages and profits go into peoples’ banks accounts and then are spent on other energy intensive items such as travel, food, houses etc. So in the end, doesn’t all money end up as money used to buy energy? Even buying artwork, or having a haircut is not exempt because that money goes on to someone who will in turn spend it on something else.

[edit] Case Study: Compact Fluorescent Lamps

To give some examples of CO2 payback period and CO2 bang for buck, let’s start with the much publicised compact fluorescent lamp (CFL).

A CFL today sells for around $3. A 15 watt one can replace a 75 watt incandescent. Let’s assume a 5000 hour life. Over that time, the CFL will have saved 60 x 5000 = 300 kWh. Another assumption I make here is that 1 kWh of electricity produces 1 kg of CO2, the Australian average. So what’s the maximum CO2 that would have been produced in making the CFL? Let’s assume electricity is $0.15/kWh (I’m using retail price of the CFL and retail price of electricity). At that price the CO2 cost of the lamp is 20kg CO2 but over its life it will have saved 300 kg so the net benefit is 280 kg. The CO2 payback time is only about 2 weeks running time. The cost of CO2 saving is about $10/tonne.

The problem with this calculation is that although it can tell you that at worst, there will be a good CO2 benefit in the CFL, it falls apart at the other end of the scale. Applying this method to other common energy saving or electricity generating methods, may come up with the result that there will never be a CO2 benefit. For example it would come up with the prediction that a hybrid car, or rooftop solar photovoltaic system will never return a CO2 benefit.

[edit] CO2 intensity

To make a more realistic estimate of the CO2 payback period of any device or project, I have used a measure known as "CO2 intensity", beloved by the likes of George Bush. However, in spite of its misuse, this number, the CO2 produced per GDP is a good average indicator of the CO2 produced as a consequence of spending money on a something (That is, some products will produce vastly less CO2 emissions/GDP, and some vastly more. Petrol, for instance, would likely have a high emissions:cost ratio). It is therefore useful in estimating the CO2 produced in applying an efficiency measure or building a renewable energy source. The idea is that spending money adds to the GDP and also, on average to the CO2 produced. The rate is about 0.5 tonnes/$1000 (kg/$) for the US & Australia, 0.25 for the EU and 2 for China. This number varies because of the type and efficiency of the plant used and the salaries in those countries. In generally more developed countries emit less CO2 for the money circulating in their economies.

Here's the general idea: A Prius costs $8000 more than a normal car so its CO2 cost is 0.5 * 8 = 4 tonnes CO2. A normal car produces about 4 tonne/year and the Prius is twice as efficient so it saves 2 tonne/year. Thus the CO2 payback period = 4/2 = 2 years. This calculation is based on 2.67 kg CO2/litre of fuel, 15,000 km/year, 5 litres/100km saving over a conventional car.

This simple method shows that the hybrid car does recoup the CO2 produced in its manufacture, comfortably within its lifetime.

If we want to apply a similar methodology to electricity saving or electricity generation from a CO2 free source, we need another figure. This is the CO2 produced from a kWh of electricity in the country (or electricity grid) where the measure is being applied.

This is about 1 kg of CO2 per kWh (1 tonne/MWh) for Australia, 0.7 for the US, 0.5 for the EU. The number varies because different countries have different proportions of coal, gas, hydro and nuclear energy.

The CO2 payback time = (CO2 emitted) / (CO2 saved per year)

CO2 emitted = ($ cost of measure)*(CO2/$GDP)

CO2 saved per year = (MWh/year produced) * (tonnes CO2/MWh)

CO2 payback time = ($ cost of measure)*(CO2 /$ GDP) /(MWh/year produced) / (tonnes CO2/MWh)

The last equation uses a factor (CO2/$GDP)/(tonnesCO2/MWh)

This is a pretty robust number since the countries with the highest CO2/$GDP have the highest tonnesCO2/MWh. There is less variability in the result than in either number by itself. Using the ballpark figures of 0.5 kgCO2/$GDP and 1 kgCO2/kWh, the following table was produced.

Apart from knowing how quickly the CO2 debt will be repaid, it is interesting to know how much CO2 the reduction costs in dollars, over the expected life of the project. A very rough estimate can be obtained by dividing the cost of the project by the CO2 reduction after the debt has been repaid. This is listed in the last column of numbers.

Energy saving measure	Life (years)	CO2 payback time (years)	Cost of CO2 reduction ($/tonne)	Cost of CO2 reduction incl. cost of energy saved ($/tonne)
Compact fluorescent lamp (CFL)	0.571	0.00	10	-$141
More efficient fridge	15	1.37	201	$36
Mildura power solar power	25	0.76	63	-$92
Remote area solar system (Mornington Western Australia)	25	6.72	735	-$826
Rooftop grid connect system	25	3.00	272	$102
Birdsville Geothermal	25	0.40	33	-$120
Large Geothermal	30	0.17	11	-$139
Portland wind farm	25	0.27	22	-$130
Cloncurry thermal solar	25	0.52	42	-$111
Georgia nuclear	40	0.34	17	-$134
IRIS sealed nuclear reactor	30	0.17	11	-$139
Domestic Solar/gas hot water service (HWS)	20	0.62	64	-$90
Solar/gas HWS holiday house 10% occup	20	6.20	899	$682
Hybrid car extra cost	15	2.00	308	-$428
Gorgon CO2 injection project	40	0.14	7	$7
CCS Otway basin	10	0.15	30	$30
Callide Oxy-firing demonstration and CCS	3	3.13	no reduction	no reduction
Fairview coal bed methane	10	1.73	417	$417
Shred money	1	0.00	2000	$2,000

An important point with a clean energy project is the expected utilisation of the measure. As an example I have shown not only the data related to a domestic solar hot water system but also the same system installed in a holiday house which is only occupied on weekends and holidays. The 10% occupancy figures show that over the life of the system, the CO2 will be reduced (compared to a conventional system) but the cost of this measure is nearly $900 per tonne of CO2. It might be better to consider other, greener ways of spending the money.

Whilst this method does not in any way constitute an accurate calculation, it does allow one with minimal information, to test the plausibility of over-optimistic statements or claims that something “will never break even”.