In its 28 page report, Going Green for Less: Cost-Effective Alternative Energy Sources, the C.D. Howe Institute has investigated the common renewable energy programs that governments seem to favor. They concluded that government money is being disproportionally directed towards high-cost CO2 mitigation technologies while underfunding the technologies that actually offer the lowest cost CO2 mitigation. (i.e the most expensive and lower-impact technologies receive the most government money, while the least expensive technologies that have much better CO2 displacement potential receive the least amount of support). 

The lowest-cost and highest-value programs are the “Renewable Heat and Power Technologies,”which include solar air/water heating,  solar electricity, wind and biomass.  The cost to the government (and therefore taxpayers) to displace one ton of CO2 from any of these technologies ranges from CAN $4-$30 per ton. In stark contrast, the most expensive government programs were for liquid biofuels; these cost taxpayers CAN $295 to $430/ton of CO2 displaced from ethanol and CAN $122 to $175/ton of CO2 displaced from biodiesel.

The graph below illustrates the cost in Canadian dollars to offset one ton of CO2 from each “green” energy option. The analysis and conclusions were based on the existing Canadian programs, but the findings have universal relevance because they expose the basic cost / benefit realities of the different renewable energy options.

The most cost-effective form of CO2 abatement is from solar and specifically the lowest cost options to governments are from unglazed solar air heating technologies and solar photovoltaics replacing coal generators. In Canada, here are some relevant facts to consider on the actual production of CO2:

• In 2006, a total of 721 MT (million metric tons) of CO2 were produced in Canada.
• 217 MT were from thermal energy sources for space and process heating in the manufacturing/industrial, services and residential sectors. 
• Transportation was responsible for 159 MT
• Electricity production for 113 MT

The quantities of CO2 reductions that governments around the world have committed to reduce are staggering. There are clearly substantial fiscal and budgetary implications for generations to come between solutions that cost under $5/ton or $10-30 a ton; and those that cost hundreds of dollars per ton of CO2 displaced.  The C.D. Howe Report makes clear where taxpayer money should be spent to get the biggest CO2 bang for each buck spent.