From Envirowiki

To explain the concept of transporting negative CO2, I shall use a few examples. A friend expressed the desire to go green and how good it would be to have solar panels on her house. Unfortunately she told me how her roof was quite unsuited to solar. I said “your son has a big roof facing north, why not put it on his roof?” But “I want to go green!” she replied. But here’s point: does the atmosphere know what roof the panels are on? If your intention is to be green, the obvious tactic is to put the panels on the most suitable roof available, who owns the roof is not relevant. Of course there is the minor matter of who’s electricity bill gets the benefit, but that’s an accounting issue.

To illustrate in a different way, I will mention another friend’s household in British Columbia which uses 240 kWh per day (in contrast to our house 7 kWh per day). The electricity is used by a very inefficient heat pump used to heat the house. I was told however that that was OK because all the electricity in BC is hydro. But just across the border, in Alberta, the power is 85 % coal. So a more judicious use of power in BC could mean that power could be exported to Alberta, cutting total emissions of Canada overall. A very high value measure would be to give the family a more efficient heating system. The abatement would come at $10/tonne CO2 even though BC has hydro.

Yet another friend recently wrote that he bought a 2.1 kW array of solar panels. It cost $25,000 complete including inverter and installation. The federal government gave him a rebate of $8000. Buying the solar panels gave him carbon credits worth a further $1000.

The price of installed PV power has come down somewhat. Let’s look at the figures. For Melbourne or Sydney the factor between peak and average power is about 7. So a 2.1 kW array has a mean output of 300 watts. The inverter has an efficiency of about 90% and realistically, solar installations are de-rated at 90% because output drops with temperature. So that makes the effective output 243 watts or 2129 kWh/year. At current Melbourne prices of 13.4 cents per kWh that’s $285 worth of electricity per year. Cost of installation after the rebate and credits is $16,000. To get that back, as a very crude guesstimate: 16000/285 = 56 years. Now I freely admit that electricity will probably go up faster than inflation and indeed it should. The real point here is that electricity in Australia is ridiculously cheap – making renewable energy and conservation almost never worth it. To put it another way, $16,000 invested at 6% returns about $960/ year, which means the electricity costs 960/2129 = $ 0.45 /kWh or 45 cents/kWh. Without the government rebates this would be 70 cents/kWh. And that calculation didn’t include the replacement cost of the installation at the end of its life.

As much as I would love to put a domestic, grid connected solar system on my house, my logic said it doesn’t make sense. However; what if I were to move my solar array to a much sunnier place, say the Kimberley? And what if the electricity at that place cost 3 times as much as it does in Melbourne? Wouldn’t that make it a good proposition? OK – people won’t be able to see the array on my house to show off how green I am. But instead am supporting the building of a 32 kW (peak) solar installation in the Kimberley. It is on the Australian Wildlife Conservancy property "Mornington Wildlife Sanctuary". The WA government will provide 55% of the capital cost. In the reader’s example above, the rebate was effectively only 33%. The added bonuses are that AWC reduce their diesel bill whilst I get a tax deduction.

You may notice, from what I said above that, by investing in AWCs solar array in the Kimberley, I have actually forfeited my free electricity. The array on my roof would have given me 'free' electricity. Well at least at no further cost. But what if I invest my tax savings in an Ethical managed fund? Even a modest return would get me the $285 I would save on electricity.

[edit] A thought on carbon offsetting

Have you ever wondered why carbon offsetting is so cheap? I certainly have. While stumping around trying to raise money for a solar system for the Australian Wildlife Conservancy I was thinking: Why we doing this? For only $1000 a year we could offset the 80 tonnes of CO2 a year put into the atmosphere by AWC’s diesel generator. I think I have it figured out…

Say you lend me $100. After a while you come back and say “what about my $100?” I reply OK, here’s $10 – just put it in the bank at 5 % interest and in 50 years it’ll be worth $115.

A tree will remove a tonne of CO2 over its lifetime. Isn’t that the same as the $ 10 repayment?

My suggestion is to offset approximately 10 times as much as the going rate to break even on CO2.