Why I Love Carbon Offsets

A few months ago, I seriously investigated installing a 2 kilowatt solar electricity system. I chose 2 kilowatts since that is the size system that would fit on my roof. We have a limited amount of space with the right orientation and access to direct sunlight. Here are vital statistics on the system that I was considering...

The 2 kilowatt system would have cost approximately $19,000 installed and have covered a 10' by 15' section of my roof. I would have received $2,000 back from the federal government when I filed my taxes and assuming I could get them, another $5,500 in rebates from the state. That would have put my out of pocket costs at $11,500. If I financed that amount using a home equity loan, my annual payments, net of taxes, would have run approximately $500 per year, almost exactly washing with the $500 in annual electricity cost savings I would have realized (2,900 kilowatt-hours generated x 17.2 cents/kilowatt hour at Massachusetts's prevailing rates).

On the global warming front, for my effort, I would have eliminated 5,800 pounds of carbon dioxide emissions per year, or 2.6 metric tons. That sounds like a lot, but Carbon Offsets currently run approximately $5 per ton, making the total cost of achieving the same amount of carbon reduction about $13 per year.

This analysis isn't meant as a condemnation of solar electricity. I think it is an important technology that will be increasingly critical as prices fall and it delivers real electricity cost savings. However, a home solar panel project is not easy to do. That is why today, as a way to help the environment, it doesn't hold a candle to Carbon Offsets. In our new report, we take a look at the current state of the market for Carbon Offsets and discuss what it will take to take them to the mainstream. To download the report, click here.

Comments

[dmb038]

No doubt, carbon offsets seem like a great way to make "going green" an effort in leveraging the free market.

In my research, it appears that the underlying for carbon offsets are usually re-forestation. But is the carbon offsetting process itself carbon neutral?

Let's say I purchase one unit of carbon offset. By buying this instrument, the seller is obligated to plant x number of trees to offset the amount of carbon I'm consuming. But it takes fuel, dump trucks, vehicles, fertilizer, etc to plant those trees. Is the carbon consumed during the tree planting priced into the carbon offset that I bought? Or am I just transferring the carbon consumption to the seller of the instrument, who is not himself planting the trees to cover his own carbon use?

I would assume that this is all priced in, but is there any data available that proves it?

[jadleddyatots]

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