Prius vs. Home Energy Retrofit Part Two

The Face-Off: The Prius vs. Home Energy Retrofit, Continued

So, how does buying a Prius vs. doing a home energy retrofit compare in terms of reducing your carbon footprint and what is the return on investment on each? This post is the second in a series. Read part 1 here if you haven't already.

Round 2: John — A high-mileage driver living in an older house.

John drives 24,000 miles/year in a vehicle that gets an average of 18 mpg (city/hwy combined) and lives in a pre-1977 house.

If he buys a Prius:

Trading in his vehicle for a new Prius will reduce John's fuel consumption by 1333 gallons per year, save him $2,400 in annual fuel costs (a 9.6% return on a $25,000 investment) and prevent 4,800 pounds of carbon from being released into the atmosphere annually. In his case, paying off the carbon debt of buying the new Prius through his fuel savings will take less than one year. What do we mean by a carbon debt? From a carbon footprint perspective, John will not begin making a true reduction in his carbon footprint until he recoups the energy intensive process of the manufacturing of his new Prius — the equivalent of consuming 1000 gallons of gasoline.

Cost-Benefit of a New Prius for John: $25,000 invested, 9.6% ROI, Annual Carbon Savings 4,800 lbs (starting in year two). If he keeps the car for 7 years, the average annual carbon savings is 4100 lbs per year.

If he does a home energy upgrade:

Typically, pre-1977 homes are characterized by inadequate insulation, poor air sealing (read: drafty!) and have inefficient single-paned windows. Retrofit improvements typically involve air sealing, adding insulation, installing double-pane windows and upgrading heating/cooling appliances. Consequently, large improvements in energy efficiency (up to 50%) are realistic expectations for retrofit investments ranging from $5,000 to $50,000, depending on the house's existing deficiencies. So, let's say John invests $25,000 into an energy audit and retrofit work and obtains a 50% improvement in overall energy efficiency. If his annual energy consumption before the retrofit was 20,000 kWh (at 10 cents per kWh) then his annual fuel savings after the retrofit would amount to $1000, or a 4% return on the investment. A 10,000 kWh reduction in energy consumption would prevent 5,667 pounds of carbon from being released into the atmosphere (assuming coal is the primary fuel used to generate electricity in John's state).

Cost-Benefit of an Energy Retrofit for John: $25,000 invested, 4.0% ROI, Annual Carbon Savings 5,667 lbs

P.S. — John might have been able to save a big chunk of that initial investment if he took advantage of all the tax credits for his retrofit, making it an even better investment.

Which is a greener choice for John?

In this scenario, John (a high mileage driver in vehicle with a low MPG rating living in an older house) will achieve a greater impact to his carbon footprint through the home energy retrofit over the first 7 years, but he'd get a better ROI by trading in his vehicle for a new Prius. If John is planning to stay in his house for more than 7 years, the return on investment of the retrofit will start to look better.

We left out lots of more detailed factors on both sides — in an attempt to simplify the numbers. If you think we missed something important, contact us and share your thoughts.

What is the greener choice for you?

The answer to this question clearly depends on your unique set of factors: what era house you live in, how much you drive, your current vehicle's mpg, etc. However, there are tremendous opportunities to reduce your carbon footprint and fuel costs, both at home and on the road. And, while choosing a more fuel efficient vehicle is an obvious step towards reducing your carbon footprint, investing in a more comfortable and energy efficient home can often provide an equal, if not greater, reduction in your carbon emissions — and, in many cases, for a fraction of the cost!

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