Reduce Carbon Reward yourself

 

The public debate on reducing carbon is often stuck at a “macro” picture, and usually ignores people who are the actual end-point consumers of all economic, commercial and industrial activities.  Given the scale of the problem, our general inclination is to look at  esoteric solutions (e.g. carbon sequestering) to bury the problem.  The cost of implementing and managing such systems triggers stiff resistance, and precipitates such illogical questions like “is global warming really man made?” or  “how does it help if we do but other countries do not?”.  

Turning away from reality or ceding the leadership in critical matters can hardly be considered as great options.

While the “polluter pays” principle has found acceptance, it is generally believed that this concept cannot be extended down to the end user level, at least directly. This leaves the individual out at the fringes of the debate, leaving politicians and lobbyists to thrash the issues out or lock themselves into a stalemate.

Why not get everyone involved?

Every person is responsible for greenhouse gases when the person consumes energy, specially that coming from burning of fossil fuel.  This is a result of everyday activities  when a car is driven, energy is used at home, tap is turned on and garbage is generated.  And this makes it harder to look at solutions at the consumption end.

We look at the two areas- Carbon Dioxide emission from cars and homes below.

Saving carbon on the road

 

According to  data  from DOT and EPA,  United States has 237 million private vehicles registered in 2012.  DOT estimates that a vehicle is driven, on an average 12,000 miles per year. The average gas consumption per vehicle is 23.5 miles on 1 gallon of fuel.  A quick calculations brings out that a motor vehicle emits 4.51 tons of Carbon Dioxide every year.  From this we can estimate that 1,073,365,831  (1.07 Billion) Tons of the greenhouse gas is released in the US! 
 A 5% saving can spare 53 million tons of CO2  (creating as many Carbon Units).

Now if we price this savings in the Carbon market, taking the price at $14.6 per ton (or per Carbon Unit) that was struck in the second auction in California this year, we are looking at a value of $780 million in carbon offsets. This number, of course, will rise when the Carbon Market becomes stronger.

A 5% saving means that a user can choose to either shave off 50 miles of driving every month, or take steps to raise the fuel efficiency of the vehicle to 24.6 gallons per mile.  [This last argument needs to be qualified since EPA has fuel efficiency benchmark for different makes and models, and a user will have to coax more to go beyond the specified benchmark for his vehicle]

Carbon Savings in the homes 

According to Census data there are 132 million (132,312,404) housing units in the US (2011). EPA has estimated that average annual energy consumption per housing unit was 11,280 kWh. This translates into 7.95 tons of CO2 every year, or 1.05 Billion tons collectively. This number is inline with the findings  (2008) by California Building Industry Association that single family homes of 2400 sq. feet generates 10.9 metric tons of Carbon Dioxide every year!

 Proceeding as before, and assuming a 5% frugality by dwellers, there is a potential to save and bring 52 million tons of Carbon Units into the Carbon market valued at $768 million. A 5% annual saving of carbon is roughly equivalent to running your air-conditioner half an hour less every day (assuming that you run a 1.5 Ton AC, 10 hours a day, 6 months in a year) or as simple as not having your AC running in the parked car while you are in the supermarket.

Not just numbers only!

Sounds like purely an Excel exercise?  Actually there have been some interesting examples.   

Take the case of Maine Housing Authority. Using Weatherization Assistance Program, they devised a way of measuring and certifying reduction in Carbon Dioxide emissions from low income housing units. This saving was converted and sold as Carbon Units. In 2012, the Housing Authority sold 7000 Residential offsets to Chevrolet who helped them in making investments to develop the carbon offset. The Authority has made an interesting revenue projection ( a screen shot appears below)

 

Notice that the middle price projections is based on $15 per unit (the 2013 pricing in California Carbon Market)

With innovative experiments like this, it is not too difficult to develop a model where individual drivers and home dwellers are motivated enough to save carbon, and participate collectively in the carbon market. The Units they save, however small, can accumulate periodically, instead of just disappearing unaccounted. These Units will get traded and earn financial returns via carbon markets. Such an arrangement will have the potential to kick off a positive feedback loop to generate more savings!

The end user, once coupled with the carbon market via the model, will perceive the carbon saving programs to be financially rewarding. Note that this earning via carbon Units is in addition to the savings that accrue on reducing energy bills.

It is easy to see that the feedback loop, once started, can trigger a demand for energy efficient appliances, electronic gadgets that reduce vampire trickle (a report by NRDC has revealed that the chargers are responsible for 5 million tons of the greenhouse gases in US every year) and fuel-efficient vehicles.  Manufacturers will introduce energy saving products based on the pressure of demand, instead of fighting or reluctantly agreeing to regulations. This may stimulate interest in accelerate retrofitting and installation of solar panels.

You will not only feel good about saving the planet...but will have your carbon units to vouch for it too!