The reduction in carbon (and other greenhouse gas) emissions resulting from energy efficiency projects is usually calculated by multiplying the reduction in energy consumption by an “emissions coefficient”, that represents the amount of CO2 equivalent released per unit of energy generated.
I believe that the “official” value used in New Zealand understates the carbon benefits from efficiency projects, and also understates the carbon costs from increasing electric demand.
The electricity emissions coefficient used in New Zealand varies year by year, and is regularly updated by the Ministry for the Environment. Typical emissions coefficients are about 0.19 kg CO2e per kWh of gas consumed (burned), and 0.12 kg CO2e per kWh of electricity generated.
These represent the average emissions for each source of energy. For electricity, this averages out the amount generated by hydro, wind and solar (with zero emissions) and other sources with higher emissions. The highest is coal, which emits about 0.60 kg CO2e per kWh generated.
Although the amount of CO2 emitted from burning gas (1) is relatively constant (the chemical composition of reticulated gas in New Zealand varies only slightly), the emissions attributable to electricity generation (2) are more complicated, and using the averaged
coefficient published by MfE significantly undercounts the effect of energy efficiency improvements.
This is due to the nature of the New Zealand electricity generation system, whereby generation plant is dispatched based on a price bid by the owner of the generation plant. Usually hydro and wind, the zero-emission sources, are bid at the lowest price, so they are always dispatched, whereas fossil-fuel plant comes at the highest price.
The result is that all of the hydro and wind available are used. The variation in the amount of electricity generated is mostly in the amount of coal and gas burned to make up the difference between what the hydro can supply, and what the total demand is. Thus, by reducing the excess demand, electric energy efficiency almost always displaces
electricity generated by burning fossil fuels, while having almost no effect on the amount of hydro and wind generation.
In 2006, the New Zealand electricity industry adopted an electric coefficient of 0.6, representing thermal plant usually running at the margin.
CONCEPT CONSULTING REPORT
Using a higher emission coefficient, of 0.6 kg/kWh, better represents the value of energy saving projects and also the costs of increases in electricity demand.