A landmark study on the true cost to taxpayers of the most common “green” initiatives was released earlier this year from the preeminent C.D. Howe Institute in Canada. The information, empirical studies and analysis contained within the report are so relevant to the stated objectives of practically every government that it is surprising that this report did not attract widespread coverage. Crafting policy to maximize CO2 displacement is a stated objective of almost every level of government, and crafting policy to cost-effectively maximize CO2 displacement should be the guiding principal behind all this green legislation. But is that happening? The C.D. Howe Institute crunches the numbers and concludes that it is not.
So What Is Going On?
In its report, Going Green for Less: Cost-Effective Alternative Energy Sources, the C.D. Howe Institute has surveyed all the “common” renewable energy programs that governments seem to favor (the example used was Canada). What they have concluded is that government money is being disproportionally directed towards high-cost CO2 mitigation technologies while underfunding the technologies that actually offer the lowest cost CO2 mitigation. (i.e the most expensive and lower-impact technologies receive the most government money, while the least expensive technologies that have much better CO2 displacement potential receive the least amount of support)
This is something that should perplex economists and taxpayers alike.
The C.D. Howe Institute identifies that the lowest-cost and highest-value programs are the “Renewable Heat and Power Technologies,” which include solar air heating, solar water heating, solar electricity, wind and biomass. The cost to the government (and therefore taxpayers) to displace one ton of CO2 from any of these technologies ranges from CAN $4 per ton (for solar air heating) to CAN $30 per ton (for biomass). In stark contrast, the most expensive government programs were for liquid biofuels; these cost taxpayers CAN $295 to $430/ton of CO2 displaced from ethanol and CAN $122 to $175/ton of CO2 displaced from biodiesel.
The graphs below summarize the cost in Canadian dollars to offset one ton of CO2 from each of the different “green” energy options. It is important to note that the analysis and conclusions were based on the existing Canadian programs, but the findings have universal relevance because they expose the basic cost / benefit realities of the different renewable energy options.
Some Facts on the Real Breakdown of Energy Usage
These graphs highlight that the most cost-effective form of CO2 abatement is from solar, and specifically the lowest cost option to governments is from unglazed solar air heating technologies. Solar air heating systems heat ventilation and indoor air, which also happens to be the largest — typically overlooked — usage of energy in any heating or mid-latitude climate. (For more information on this topic, see my previous article on RenewableEnergyWorld.com)
In Canada, here are some relevant facts to consider on the actual production of CO2:
- In 2006, a total of 721 MT (million metric tons) of CO2 were produced in Canada.
- 217 MT were from thermal energy sources for space and process heating in the manufacturing/industrial, services and residential sectors. This is the largest single source of CO2 in Canada.
- Transportation was responsible for 159 MT
- Electricity production for 113 MT
With respects to the 217 MT of CO2 produced from heating: Thermal heating generates over 30% of the CO2 emissions in Canada yet it receives approximately 1% of the money allocated by the federal government to GHG mitigation. It is also interesting to note that even in a city such as NYC, which has the densest concentration of electricity usage in the world, 51% of the energy required in buildings is for heating.
This means that widespread CO2 reductions are not going to be achievable unless the appropriate programs are put in place to address this large source of CO2.
The C.D. Howe Report states:
Federal programs to support renewable heat are currently limited even though heat-related energy applications — such as residential and commercial space and hot water heating and thermal energy for industrial processes — account for the largest proportion of demand for fossil fuel energy in Canada, as in other industrialized countries, and, therefore, represent a very large opportunity for the mitigation of GHG emissions. So far, only $36 million in federal funding is designated for capital cost incentives for renewable heat in the industrial, commercial and institutional sectors through the ecoENERGY for Renewable Heat program.” [Emphasis mine]
So what does this mean?
Simply stated, for all the governments that are crafting climate change policies and programs — and who wish their programs to actually be successful at both maximizing CO2 displacement and doing it in a cost effective manner — this report provides the rationale as to why it is essential to direct more funds to renewable heating. Given that there are solar heating technologies on the market that can displace up to 50% of the heating load, the potential for igniting meaningful CO2 emission reductions from this one sector is incredible.
Governments must clearly navigate through the maze of misinformation that tends to plague discussions on energy and recognize the true origins of CO2 emissions and the real costs associated with the myriad of displacement options. They must then commit to allocating real resources and to developing real mechanisms to target the thermal heating component, given that it offers the most compelling cost/benefit analysis when compared against all the other “green” energy solutions. This is a strategy that will offer not only “good value” for cash-conscious governments and taxpayers, but for the entire environmental movement. There are some staggering quantities of CO2 reductions that governments around the world have committed to and there are clearly substantial fiscal and budgetary implications for generations to come between solutions that cost under $5/ton or $10-30 a ton; and those that cost hundreds of dollars per ton of CO2 displaced. The C.D. Howe Report makes clear where taxpayer money should be spent to get the biggest CO2 bang for each buck spent.
Victoria Hollick is the President of Conserval Systems (SolarWall USA) of Buffalo NY, which has been instrumental in commercializing and promoting solar air heating around the world for the commercial & industrial sector with the SolarWall® air heating technologies. Victoria has had a life-long interest in solar, and became further interested in effecting environmental and renewable energy policy while completing a graduate degree in economics. She is also on the Board of Directors of the New York Solar Energy Industry Association (NYSEIA) and the Canadian Solar Industries Association (CanSIA). Victoria can be reached at [email protected] and she always welcomes comments and questions from readers.
*And as a final caveat to the C.D. Howe report, which was focused on Canada, Victoria would like to point out that while drastically increasing the support for solar heating is a necessity to cost-effectively reduce GHG emissions across the globe, at least Canada should be strongly commended for having a specific national solar thermal program in place. This program has been successful in terms of building an industry and has spawned Canadian innovation in the field of solar air and water heating technologies.