Calculating The Amount Of CO2 Reduced By Renewable Energy
Emissions reduced by renewable energy depend on a number of factors. In 2021, coal-generated energy corresponded to 61% of total generation in the US but was responsible for 99% of the CO2 emissions in the same period. Given how fast the world is moving to clean energy (and needs to move to), we often get asked why we decided to focus mainly on investing in renewable energy. And inevitably the question boils down to efficacy – is it better to reduce the amount of CO2 that goes into the air or remove the CO2 that is already in the air? The most obvious answer is to do both, but surely it is better to just pump less CO2 into the environment to start with. After all, it’s better not to litter than it is to litter and then clean it up!
But how much CO2 an investment in renewable energy reduces? There are several criteria that go into that calculation:
1. What is the type of renewable energy? Lower the carbon footprint with the lesser the investment, the better. Renewable energy projects, such as solar and wind, have a higher return on the investment per carbon footprint.
2. In the case of solar energy, what are the sun factor and the panel efficiency? Solar panels capture sunlight and convert it into electricity. Therefore, the sunnier a place is, the greater the solar potential in terms of electricity generation. We could say that probably a solar panel would be more efficient in California than in London, for instance. The type of solar cell also counts when it comes to investment and carbon footprint. Nowadays, there are 4 main types of solar panels: monocrystalline, polycrystalline, PERC, and thin-film panels. Each of them has different costs, efficiency, and lifetime.
3. Is the energy being used instead of coal-generated electricity or another lower-carbon electricity? States with a more coal-dependant energy matrix can benefit from renewable energy than cleaner ones. So prioritizing projects in states with a higher coal-dependant energy matrix could have more impact on the carbon footprint. West Virginia, for example, is more coal-dependent than California. So installing a solar farm in West Virginia would have a higher effect on CO2 emissions than doing it in California.
What is the carbon footprint of renewable energy sources?
Solar panels require energy to run machinery for manufacturing them. Even though it depends on the type of solar panel being manufactured, the process generates a proxy of 0.11lb of CO2 per panel. As a comparison, oil production generates 160lb of CO2 per MMBtu, and coal mining about 200 lb per MMBtu. During the operation, solar panels will not emit CO2 to generate electricity, while natural gas burn will generate 0.91lb/kWh, petroleum 2.13lb and burning coal will emit 2.23lb of CO2 into the atmosphere.
The math behind it
In 2021, the net generation of electricity in the US was 4.11 trillion kWh, generating emission of 1.5 billion metric tons of CO2. This is 855lb of CO2 per MWh – between 199lb for the cleanest and 1.932lb for the state with the dirtiest power grid.
The cost of renewable energy is steadily declining. According to the United Nations, the cost of electricity from onshore winds was reduced by 15%, while offshore wind and solar dropped by 13% each in a 2-year period. Nowadays, the breakdown of cost per type of renewable energy is as follows:
1. Solar, standalone — $32.78 per MWh
2. Geothermal — $36.40 per MWh
3. Wind, onshore — $36.93 per MWh
4. Combined cycle — $37.11 per MWh
5. Solar, hybrid — $47.67 per MWh
6. Hydroelectric — $55.26 per MWh
7. Biomass — $89.21 per MWh
8. Battery storage — $119.84 per MWh
9. Wind, offshore — $120.52 per MWh
Given that the levelized cost for utilities in the US is $31-45/MWh we will assume a $40/MWh as a proxy cost of renewable energy in the US. This means that, in the US, $40 reduces 855 lb of CO2 – or 21.5 lb per dollar. The operating lifetime for a solar plant is 25 years, but to be conservative let’s say 20 years. If we estimate a 20-year lifetime for a given renewable energy project, this means that you can reduce 1 lb of CO2 from the environment every year for 20 years with $1 of investment.
Emissions reduced by renewable energy funded by Dyme Dividends?
Across Dyme’s portfolio of investments and over time we aim for 100 Dyme Dividends to represent a reduction of 21.5 lbs of CO2. In some projects, we may achieve more reductions (for example projects in areas powered by coal), and in some other projects, we may achieve fewer reductions. But across the board, we aim to manage this number since we all want to make sure we reduce as much CO2 entering the environment as possible.
How does this work in practice
Every month we receive commissions and rebates from merchants that you spent at – whether on your credit card, via Chrome extension or our other partners and we invest with developers. We may find a project in a particularly high carbon intensity electricity region and in that case, each dollar we deploy will reduce more CO2 than say if we’d invested in a cleaner generation area. Or because of technology, the cost of deploying solar projects reduces, and we’ll end up being able to deploy more solar projects reducing more CO2 – and at that point, we’ll be able to give our customers more Dyme Dividends for every dollar spent.
In the quest for reducing CO2 emissions and promoting clean energy, investing in renewable energy projects becomes crucial. Dyme, a prominent player in this field, focuses on funding and supporting renewable energy initiatives that aim to decrease carbon footprints. By channeling investments into solar, wind, and other sustainable energy sources, Dyme plays a significant role in reducing CO2 emissions and building a greener future. Their commitment to funding projects in areas with high carbon intensity electricity regions ensures a greater impact in terms of CO2 reduction. With Dyme's contributions and the collective effort to embrace renewable energy, we can move closer to a sustainable and low-carbon future!
