Inderscience Publishers

Economic impact of the valuation of life cycle CO2 emissions from renewable and fossil energy systems

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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.

Keywords: carbon emissions, abating costs, renewable energy, CO2, Argentina

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