Introducing Green Reward
In 2020, Bill Gates introduced the Green Premium, as a tool to understand the additional costs of going ‘green’. The tool allows identifying in which industries there are the bigger challenges to overcome climate change. The Green Premium is the additional cost to be paid for a product or service being carbon neutral versus its fossil or traditional alternative. Ensuring we have zero-carbon transport, energy, and food.
On the other hand, a Green Reward comes as a product, service, or habit that comes at a lower cost than the traditional alternative while being more sustainable. It is partially presented by Breakthrough Energy as a negative green premium, although no focus on these solutions, rather on identifying sectors where new technologies are needed.
Today, there are solutions that will allow you to save money on a monthly basis, others with a positive cash flow after 4 – 6 years, and with a return on investment of over 100% in 20 years with very low risk.
However, estimating Green premiums is not an exact science, neither it is calculating Green Rewards.
A few examples are presented below.
Reduce the energy demand
For example, switching lights from incandescent to LED and selecting the right watts/lumens can reduce energy for lighting by 90%. The payback period of LED retrofit depends on several factors, including especially the electricity price. For industrial applications and special cases where lighting consumption is significant, the payback time is less than a year.
LED deployment is advancing, and LED sales now exceed fluorescent lamps, as LED costs continue to fall.
Back in 2019, in the UK, a retired engineer said that the payback was only within three to four months. Potential savings are big for households, communities, and companies. Considering a lifespan of up to 15 years, the Return on Investment could go as high as 650% (6x). There are other alternatives to reduce the energy demand, but typically with lower returns, such as low consumption appliances.
Solar PV panels – electricity
When you install solar panels, the power generated by your solar panels replaces the electricity you buy from the grid. Reducing or completely eliminating the bill. Return will depend on local prices, electricity costs, and tax incentives. The emissions reduction depends on the carbon intensity of the green.
In the U.S. payback times are around 8 to 10 years, which can be reduced with tax incentives and current prices to 5 years. According to Energy Sage, in April 2022, the payback period is less than 6 years. Providing over $56,000 savings over 20 years, the estimated ROI over 20 years is 400% (4x).
Transport – Car vs. remote working
The average American drives 16 miles to work each way, with a daily commute totaling nearly an hour round trip (ABC). Considering a compact car fueled by gas, the roundtrip will cost $4.69 USD, resulting in over $1200 USD per year. We acknowledge that not everyone can work remotely. In this case, reducing the size of the car can allow for significant savings. Important to note, that it is not recommended to change cars, but rather to consider the most energy-efficient alternative when buying a new one.
Shorter commutes in some cities can be replaced by biking. Data from over 100 European cities showed growing cycling rates of between 11% and 48% on average following COVID. Considering a commute of 8 miles, biking will save $2.33 USD per day. It has other advantages, it is a healthy activity and reduces pollution in the cities. Considering that you buy a new bike, the payback can be of only 6 months ($350 USD new bike) and ROI after five years of more than 700% (7x).
Green Reward is the place to start
Reducing energy consumption and emissions while making money should be the first priority in the sustainability path. With the presented green reward tool one can maximize return on investment while protecting the environment. We recommend starting here rather than buying carbon offsets or carbon capture which comes at a significant cost. According to a recent report from the EIA, the Levelized cost of capture can be up to 340 – 540 USD/tCO2.
It is also important to note, that Green Premiums unfortunately still exist; some sustainable solutions are more expensive than the fossil alternative. As presented by Bill Gates, it is an interesting tool to identify challenges that require new solutions.
With all the above an average citizen can cut their emissions by more than 50%.
