Will a Fuel Switch Reduce my Carbon Tax – and by how Much?

To answer this question, we must understand how carbon tax is calculated. So let’s start at the beginning. One’s carbon tax is calculated by multiplying the prevailing tax rate (available here) by one’s total carbon dioxide emissions. The total carbon dioxide emissions are known as the carbon dioxide equivalent (CO₂e). The carbon dioxide equivalent (CO₂e) arising from combustion is the sum of three Greenhouse Gases (GHGs) – carbon dioxide (CO₂), methane (CH₄) and nitrous oxide (N₂O). However, these are only summed after they have been adjusted for their differing global warming potentials (GWPs), so that they are “equivalent” to CO₂. Global Warming Potentials (GWPs) are used to measure the impact of different GHGs on global warming. Each GHG is compared to the benchmark of carbon dioxide (CO₂) which has a GWP of 1. Methane (CH₄) has a GWP of 23 and nitrous oxide (N₂O) has an enormous GWP of 296! This means that nitrous oxide traps 296 times more heat in the atmosphere than CO₂ resulting in a significant impact on climate change. So the carbon dioxide equivalent is calculated as follows:

The formulae above were used to create the graph below which shows the tonnes of CO₂e that are released for every terajoule (TJ) of energy for the dominant South African fuels. The carbon footprint (and therefore carbon tax) of each fuel is compared to coal using the percentage above each bar. This number can be used to determine one’s carbon tax reduction if a fuel switch were to be performed.

It is clear that coal has the worst effect on global warming.

Gaseous fuels have a lesser effect as they typically consist of short hydrocarbon chains (C_nH_2n+2). The shorter the chain length (i.e. a low “n” value in the formula: C_nH_2n+2), the higher the ratio of hydrogen to carbon and the lower the carbon footprint.

While biomass (which includes wood, bagasse, sunflower husks, etc.) produces the least GHGs per unit of energy, it is not completely carbon neutral. The CO₂ emissions from the combustion of biomass are zero because the CO₂ that is released during combustion is absorbed during the growth of the plant. However, there remain CH₄ and N₂O emissions during the combustion of biomass. Because CO₂e is the sum of CO₂, CH₄ and N₂O (after being adjusted for GWPs) there remains a small CO₂e value when combusting biomass.

While switching to a fuel other than coal may reduce the carbon tax that is payable, there are many other ways to reduce carbon tax and businesses require long term energy strategies. Our team of experienced chemical engineers would love to help you, so please get in touch.