Bill Gates Green Premiums Calculations

While Reading Bill Gates' book, How TO AVOID A CLIMATE DISASTER, there is a section called: How Much Is This Going To Cost?.

Bill writes: The Reason the World emits so much Greenhouse Gas is that, as long as you ignore the Long-Term Damage they do, our Current Energy Technologies are by and large the Cheapest Ones available. So moving our immmense Energy Economy from 'Dirty', Carbon-Emitting Technologies, to Ones with Zero Emmissions will Cost Something.

In some cases, we can price the difference directly. If we have a Dirty source and a Clean source of essentially the same thing, then we can just compare the Price.

Most of these Zero-Carbon Solutions are more Expensive than their Fossil-Fuel counterparts. In part, that's because the Prices of Fossil Fuels don't reflect the Environmental Damage they inflict, so they seem Cheaper than the Alternative. These additional Costs are what Gates calls Green Premiums.

There isn't One Single Green Premium. There are many: some for Electricty, Other for various Fuels, other for Cement, and so on.

The size of the Green Premium depends on what you're Replacing and what you're Replacing it with. The cost of, say Zero-Carbon Jet Fuel isn't the same as the Cost of Solar-Generated Electricity.

An Example of how Green Premium Works:

The average Retail Price for a Gallon of Jet Fuel in the last Two years, in the U.S. was $2.22. Advanced Biofuels for Jets, to the extent they're available, Cost an average $5.35 per Gallon. The Green Premiumfor Zero-Carbon Fuel, then, is the Difference between these Two Prices, which is $3.13. That's a Premium of more than 140%.

In Rare cases, a Green Premium can be Negative, going Green can be Cheaper than staying with Fossil Fuels. For instance, depending on where you live, you may be able to Save by Replacing your Natural Gas Furnace and your Air Conditioner with an Electric Heat Pump. In Oakland, California, doing this will save you 14% on your Heating and Cooling Costs, while in Houston, Texas, the Savin gs amount to 17%.

Green Premiums are a Moving Target. A lot of Assumptions go into Estimatinng them. What's more important than the Specific Prices is knowing whether a given Green Technology is Close to being as Cheap as its Fossil-Fuel conterpart, and for the Ones that aren't Close, thinking about how Innovation might bring their Prices Down.

Green Premiums are a Fantastic Lens for making Decisions. They help us put our Time, Attention, and Money, to their Best use. Looking at All the Different Premiums, we can Decide which Zero-Carbon Solutions we should Deploy now, and where we should pursue Breakthroughs, because Clean alternatives aren't Cheap enough.

There's One Last Benefit to the Green Premiums concept: It can act as a Measurement System that shows us the Progress we're making toward Stopping Climate Change.

CLICK HERE for more information on Green Premium Calculations.










NYC Wins When Everyone Can Vote! Michael H. Drucker