A2X Consulting

Reducing your carbon footprint can save you money. By factoring life cycle cost & environmental impact of products and services, and setting a budget, you can reduce your carbon footprint and realize notable savings.

Step 1: Life-cycle Cost Analysis

When you purchase a product or a service, the price that you pay is just one element of the cost of ownership. The other associated costs of ownership are operating costs including energy, spares & maintenance, and the disposal cost. So it is important to evaluate all costs incurred during the lifetime of a product or service. This can be done by the life cycle cost analysis approach. The life cycle cost analysis helps you make better purchase decisions when acquiring a product. With the help of life-cycle cost analysis, operating costs become visible, expenditures through various life stages of the product get highlighted, and budget planning becomes easier.

Example: The Life Cycle Cost of Light Bulbs

1. The life cycle cost of a light bulb = [the price of bulb] plus [the cost of electricity to power it].

2. Now let’s compare the life cycle cost of a 40W Incandescent bulb with an equivalent 10W CFL bulb.

3.  The price of the bulb is:
Incandescent bulb = (average retail price) @ 90 cents.
CFL bulb = (average retail price) @ $3.50.

4.  Electricity cost is measured in terms of kWh. Considering the electricity cost at 10 cents/kWh of electricity and 8 hours per day operation of the bulb, the total operation cost for a year is:

Incandescent bulb = 40W x 0.10kWh x 8hours x 365days = $11.68

CFL bulb = 10W x 0.10kWh x 8hours x 365days = $2.92 or about one-fourth of the incandescent bulb.

5. So the total life cycle cost is (adding figures from steps 3 & 4):

Incandescent bulb = $0.90+$11.68 = $12.58

CFL bulb = $3.50+$2.92 = $6.42

Additionally, the average life of an incandescent bulb is 750 hours whereas the CFL lasts for around 10,000 hours. So although the upfront cost of the incandescent bulb is significantly less than the CFL, the electricity cost to operate it is 3-4 times more than the CFL. Typically, you can save $30-$100 per CFL over its life cycle.

Life cycle cost analysis applies not only to light bulbs but also to a lot of other products that you purchase and own such as dishwashers, computers, air filters, etc.

Improving your Purchasing

Take these factors into consideration when purchasing products:

1. Price of the product
2. Operating cost over its life cycle

Step 2: Environmental Impact

It is important to consider the environmental performance of a product or service over its lifetime when trying to reduce your carbon footprint. The environmental impact can be measured in terms of carbon (CO2) emissions generated in the manufacturing and operation of the product or service.

Example: The Environmental Impact of Light Bulbs

1. CO2 emissions of a light bulb = [electricity used in kWh] x [1.34 lbs of CO2 emissions]. (As per US EIA, a single kWh of electricity generates 1.34 lbs of CO2.)
2. Now let’s compare the environmental impact of a 100W incandescent bulb with an equivalent 20W CFL bulb.
3. Electricity used for 10,000 hours of operation is:

• Incandescent bulb = [100W x 10,000hours] = 1, 000, 000Wh = 1,000 kWh
• CFL bulb = [20W x 10,000hours] = 200,000Wh = 200 kWh

4. The CO2 emissions are:

• Incandescent bulb = [1,000 x 1.34]=1,340 lbs
• CFL bulb = [200 x 1.34]=268 lbs

So a 100W incandescent bulb generates 1072 lbs (1,340-268) of more CO2 emissions than an equivalent CFL.

Environmental impact can be evaluated not only to light bulbs but also to a lot of other products that you purchase and own such as dishwasher, computer, air filters, etc.

Consider the environmental impact of products or services CO2 emissions over the product’s life cycle.

Step 3: Budgeting

A budget is an effective tool to manage your finances. Budgeting tells you how much money you have and what is going to happen to it. It helps you control your expenditures. For example, if you know you have only $10 to spend on pens, you will work a lot harder not to lose them. So a budget of $10 for pens helps you discipline yourself to purchase only what you need. This discipline also helps you reduce waste generated by pens you lose. So set a budget for your business operation needs.

Businesses generate excessive amount of waste. According to Envirowise, waste costs companies 4.5 percent of turnover. Waste reduction can save natural resources, reduce environmental impact and save significant amount of money. There are several ways to reduce waste including purchasing less, purchasing items with less packaging, recycling & reusing. Please check our tutorial “How to lower waste disposal costs” to learn about waste reduction.