Economic impact of the valuation of life cycle CO₂ emissions from renewable and fossil energy systems
by Gustavo Nadal, Osvaldo L. Girardin
International Journal of Global Energy Issues (IJGEI), Vol. 15, No. 1/2, 2001

Abstract: We use a Life Cycle Analysis (LCA) methodology and the Hotelling rule [1,2] to calculate the economic value of CO₂ emissions reductions attained through a substitution of renewable energy systems for conventional energy systems in isolated power generation applications. The CO₂ abatement value calculated in this way is used to estimate savings in electricity cost associated with PV and Wind energy systems when substituting diesel and gasoline generator sets. We also estimate the potential savings associated with a rural electrification project based on PV energy systems, when considering the value of avoided CO₂ emissions. Both present and future CO₂ savings, as deduced from the Hotelling rule, represent an important fraction over renewable energy costs. This is related to the big difference in life cycle CO₂ emissions associated with renewable and fossil energy technologies, and stresses the importance of internalising the impacts of fossil energy technologies as a means of improving the commercial competitiveness of renewable energy systems.

Online publication date: Wed, 30-Jul-2003

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