5: The Figures

Warning to the reader: this section is all about numbers and calculations! Proceed to The Upshot if it’s too early in the day for that.

1 metric ton CO2 equivalent = 1 Oneota Tag = $30

Why metric ton? We’re not trying to be european, it’s just the international unit used for offsets, even in the US.

What do we mean by CO2 equivalent? Carbon dioxide (CO2) isn’t the only gas causing climate change and warming, but it’s the most ubiquitous, so the others are all converted by potency and lumped into CO2 equivalent offsets.

That’s the magic formula. We need say no more, right? Actually, placing a price on a ton of offset is one of the greatest challenges facing any organization involved in the market.

Take a light bulb example and these inputs:

  • Say you replace a 100-watt incandescent with a 25-watt compact fluorescent
  • the bulb cost $2, lasts 8-10,000 hours, and provides a similar amount and quality of light
  • It is in your bedroom and on for an average 2.5 hours/day, 355 days/year
  • Interstate Power and Light (provider for Decorah) emits 2.4 lbs CO2 for every kilowatt hour of electricity you use
  • A metric ton equals 2205 pounds

75 watts/hour savings (100W-25W) x 2.5 hours/day x 355 days/year = 66.5 Kwh/year saved

66.5 Kwh/yr x 10 year x 2.4 pounds CO2/Kwh = 1,596 pounds CO2 = 0.72 metric tons CO2 lifetime

$2/bulb divided by 0.72 metric tons CO2 = $2.78 per metric ton CO2.

Now you’re thinking either “$2.78!! why are the charging me $30??”  or “wait a minute, I don’t leave my bedroom lights on 2.5 hours/day”,  and [a biggie] “I have some lights I use a lot more than that, and some I use almost never”, and [here’s the real biggie] “I was planning on replacing those bulbs *anyway*, so you can’t claim 10 years worth of savings!”.

There are SO many variables, even for just one practice like light bulbs, and so many assumptions that have to be made, and light bulb change-outs are probably the single most cost-effective (and easy-to-calculate) practice. When you try to develop a suite of practices, with many being less cost-effective than CFLs, the aggregating and weighting of costs based upon varying assumptions gets mind-boggling pretty quickly. That said, we’ve run the numbers many different ways, studied assumptions and discussed figures with other program managers, and in the end, we believe we can provide a suite of efficiency supplies and services using $30/ton as a fairly conservative figure, as shown below.

Note, these figures do not include labor, thanks to the availability of our well-trained Americorps volunteers functioning as the District’s Energy Corps. We will determine what portion of proceeds will be required for program administration over time, but are confident it will be a small fraction and is included in the $30/ton.

Possibly the most important part of this conservative approach is what we call the additionality factor, a number we try to assign to identify how much of the total lifetime emissions savings we’re counting, versus how much would have happened anyway. Our additionality factor is no more than a best guess, but it’s a guess many programs don’t even bother to make- they just claim credit for all savings of everything they do.

These factors will be adjusted like so many of our calculations as we monitor the progress of the program. For example, we’re counting only 25% of the savings of LEDs, assuming that many if not most people would have changed out bulbs anyway over time, given rising energy prices and climate awareness. We’re guessing that 35% of shower head savings makes sense, and maybe 45% of the savings of smart strips and some other items that aren’t as likely to rapidly reach high rates of market penetration.

So here is an outline with what we consider to be conservative, theoretical numbers:

  • We’re estimating (from initial survey data) an average of 50 light bulbs in each house. Some will have many CFLs and some none, let’s say we replace 45 bulbs/house, at $1.50/bulb, total cost $67.50. They vary in wattage from 30-100+, we’ll use 60 watts average incandescent, replaced with 13-watt CFL equivalent, for a savings of 47 watts/hour used. Some bulbs are used 6 hours/day (2,190 hr/yr) or more, some barely an hour a week (52 hr/yr). We’ll use an average of 500 hours/year throughout the house, lower than most estimates. 45 bulbs X 47 watts saved/hr X 500 hours/bulb gives a total annual savings of 1,057.5 kWh of electricity. Right about 2.4 lbs of CO2 are produced for every kWh of electricity used locally, so this hypothetical household saves 2,538lbs, or 1.15 metric tons of CO2 in a year. Lifespan of these bulbs is about 10,000 hours, or 20 years at 500 hrs/year, but we’ll be conservative and say ten years, or 11.5 metric tons CO2 reduction, for $67.50 investment. Using our “additionality factor” of just .25 (claiming only 25% of savings, assuming many would have changed out light bulbs anyway over the years), we claim 2.88 tons, which results in $23.44/ton of emissions reductions for light bulbs.
  • Shower heads are a bit simpler to figure in some ways but have just as many assumptions. If a shower gets used 1 time/day most of the year, that’s 355 showers, at an average of 10 minutes each. Starting with a typical flow rate of 4 gallons per minute and reducing to 2 with an efficient showerhead saves 2 gallons per minute, or 20 gallons/shower. If a hot shower uses 75% hot water that’s 15 gallons hot water saved, or about 120 pounds. Heating 120 pounds water from 55 degrees to 120 degrees with an 80% efficient gas water heater takes 9,750 Btu/shower or 3,461,250 Btu/year saved, or 3.46 million Btu (MMBtu). Using a DOE conversion of 116.7 lbs CO2/mmbtu, we’re saving 404 lbs/year. If the showerheads have a 10-year lifespan, that’s 4,040 lbs or 1.83 metric tons CO2 saved, and if we use an additionality factor of 0.35 (only claiming 35% of total savings), we get 0.64 tons. For a showerhead that costs $5, that’s $7.81/ton of emissions reductions for showerheads. Of course, some showerheads don’t get used, and some take shorter showers … and faucet aerators are even cheaper but cost more per ton of emissions because of the relatively low volume of hot water used in faucets compared to showers. We’ll also be installing hot water insulation in some cases, measuring hot water temperature and potentially turning it down, and talking with homeowners about easy “bright ideas” such as washing clothes in cold water with special cold-water detergents, all no or low-cost steps with potentially high savings.
  • Finally, we’ll include smart power strips here in the early stage calculations, as plug load is the fastest growing portion of home energy use and these current-sensing strips hold tremendous potential to reduce demand for computer and entertainment systems. The makers of the principal product on the market uses figures from a study showing between 300 and 600+ kWh savings annually per strip, so we’ll be conservative and use 150kwh/year savings, a lifespan of 10 years, a cost of $20/strip, 2.4 lbs/CO2/kwh, and an additionality factor of 0.45. This gives us a cost of $27.40/ton of emissions reductions from smart power strips, though this will need to be verified, like everything else, from the data.
  • If nothing else, we’re attempting to show that $30/ton is a conservative figure. We hope to include a broader suite of practices as we go on, from programmable thermostats to furnace filters, air sealing to tire pressure gauges. Part of the reason we’re being conservative on our figures is in case the data we collect show we’re still off, but partly so that as we expand the suite of practices that Energy Corp implements, we are able to include some measures that may have a higher cost/ton, yet they balance out when included with lower-cost items.

Where does $30/ton fall in the broader marketplace? As of the fall of 2010, offsets in Europe’s Emissions Trading Scheme (the largest market in the world) were in the $20 range, where they’ve been for a while.

Yale University, which has a well-respected local program focused on residential efficiency, values their offsets internally at $40/ton, not including overhead. We are developing our databases to not only allow careful tracking of products installed and estimated savings and costs, but also to allow regular input from participant questionnaires and follow-up surveys and visits. We will post our first detailed report six months into the program, at which time we will assess potential changes to the pricing structure, along with other adjustments.

6: The Upshot