The document discusses the relationship between CO2 emissions and benefit-cost tests, emphasizing the financial implications of various environmental externalities and the cost per ton of CO2 reduction. It highlights the complexities involved, including the carbon intensity of electricity sources and other factors like renewable energy investments and discount rates. The findings and calculations aim to provide a clearer understanding of the financial impacts of reducing CO2 emissions in relation to electric demand-side management programs.

1. CO2 Relationship to Benefit-Cost Test
Jamie Fitzke
Policy Associate, Lighting Consultant
July 26. 2016

2. Pg. 2
EPA: Social Cost of CO2
https://www3.epa.gov/climatechange/EPAactivities/economics/scc.html

3. Pg. 3
Societal Test
• Environmental Externalities
• $/MWh (accounting for PM10, CO, and lead reduction) + IRP value
for SO2 and NOx reduction + $/ton (CO2 reduction)
• Calculated into $/MWh
$4.74
$21.50
$36
$43
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
CO2 $/ton
CO2 $/ton
2015

4. Pg. 4
CO2 $/ton Impact
• Electric DSM program snapshot
0 0.016 0.031 0.037 0.1
$/CO2 ton $4.74 $21.50 $36 $42 $106.46
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$/CO2ton
Incremental Increase in BeneCost Ratio

5. Pg. 5
So many variables…
• $/MWh (accounting for PM10, CO, and lead reduction) + IRP value for
SO2 and NOx reduction + $/ton (CO2 reduction)
• Carbon intensity of electricity fuel source
• MRO West 1425 CO2 (lbs./MWh), 1965 (lbs./MWh)
(https://www.epa.gov/sites/production/files/2015-10/documents/egrid2012_ghgoutputrates_0.pdf)
• Minnesota Electric Utility Initial IRP 1041 CO2 (lbs./MWh)
• Generation in flux
• Re-power
• Retirements
• Renewables
• De-carbonization offsets $/ton CO2
• Other Benefit and Cost inputs
• Discount rates