The Carbon Abatement Potential of Carbon Offset Projects

In the case of climate change the question often arises of how to maximize carbon emissions reduction in a cost-efficient way. If a future benevolent global community did decide to tackle the climate change problem, it would seem sensible to pursue whats known as the “low hanging fruit” first in order to achieve the “biggest bang for our buck”.

For this purpose, the abatement cost (AC) allows one to analyse the cost of abating one unit of CO2 for a defined abatement level. My simplified example uses a metric of £ / tonne CO2 abated. It compares the abatement cost of CO2balance carbon projects against a micro-generation of electricity technique employed in the UK, rooftop solar panels. One important admission at this point is highlighting that this analysis is concerned solely about overall carbon reduction. Importantly that is just one aspect of the great work being done through CO2balance projects.

Rooftop Solar PV Theoretical Example

Installed May 2009. 2.9kW, at a cost of £15,000.

UK: 1,100 hours average sun per year

In 4 years, solar PV produced 8,000 kWh @ 41-43p: £3,350 Government subsidy

Plus ‘export bonus’ of 4,000 kWh @ 3-4.5p: £120 Government subsidy

Plus reduced electricity bills of 4,000 kWh @ 12p: £480 Government subsidy

Total: £4000 (£1000 per year, between 2009 and 2013)

Ultimately this cost is borne by electricity consumers in their electricity bills

Carbon savings @0.5kg CO2 per kWh (UK grid emissions factor)

4 tonnes CO2 abated in 4 years

Abatement cost = £1000 / tonne Co2 abated

CO2balance Projects

An artificial abatement cost of £5/tonne CO2 is inserted here to represent the cost for CO2balance to abate one tonne of carbon through carbon projects. The actual figure is case sensitive and it is not important overall as this analysis highlights that the two methods for abating one tonne of carbon are on completely different sides of an abatement cost curve.

There are obvious problems, strengths and weaknesses to this approach that are largely overlooked in this brief note, which of course justify further analysis at great depth. However, my overall thesis would be, if you are from the school of thought that holds, all else being equal, one tonne of carbon abated is one tonne of carbon abated, then CO2balance carbon projects are efficient ways of maximizing carbon emission reductions in a cost effective way.

 

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