Estimating the Cost or Savings of Emission Reductions

By Joe Abraham | The University of Arizona | June 29, 2009

Often times, policies and literature discussing options for reducing greenhouse gases speak of net savings or costs associated with curbing the volume of emissions released into the atmosphere. But who will ultimately spend or save money as a result of these options?

In general, estimated monetary costs or savings associated with the emission reduction options in each of the southwestern state climate plans are realized by the individuals, government agencies, or companies implementing the specific option or directly affected by the option.

To find out more about MMtCO₂-e, read What is a million metric tons of carbon dioxide equivalents?

For example, participants of the Arizona state climate plan estimated that reducing the speed limit of commercial trucks in Arizona to 60 miles per hour would reduce more than 5 million metric tons of carbon dioxide-equivalents (MMtCO₂-e) from 2007 through 2020, but at a cost of $35 per ton. This cost would most likely be borne initially by the trucking industry, but may be passed on in part to businesses and citizens whose goods are transported by those trucks.

Similarly, participants of the New Mexico state climate plan estimated that adopting statewide electrical energy efficiency standards would reduce more than 2 MMtCO₂-e from 2007 through 2020, with a savings of more than $40 per ton reduced. In this case, citizens and businesses using these more efficient appliances may pay more up-front for a more efficient appliance. Over the 13-year period, however, they would spend less on energy to run the appliance, offsetting the extra up-front cost and realizing additional savings equal to $40 per ton of emissions reduced.

Indirect costs or savings of emission reduction options, however, were not addressed in the state plans. A lower commercial truck speed limit, for example, would also reduce air pollutants like diesel particulate matter, which would produce a net health care savings to society by reducing air quality-related health problems. Since most of our energy comes from burning fossil fuels, greater energy efficiency can also reduce air pollution from coal-fired power plants, improving environmental quality and public health downwind of the power plants.

What is not clear from the state climate plans is just how much extra it would cost a business to ship goods by truck if the speed limit were reduced, or how much would be saved if a household bought more energy efficient appliances because of stronger appliance standards. More analysis will be required to answer questions like these.

Compare Emission Reduction Options

Estimating the Cost or Savings of Emission Reductions

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