Review and Critical Analysis of International UHI Studies

5.4 Economic Review
The magnitude of U.S. potential energy bill savings (cooling‐energy savings minus heating‐
energy penalties) has been estimated to be between $1 billion and $4 billion per year, while the
value of the abatement in local air pollution is estimated to be roughly equivalent. The range in
these estimates reflects the uncertainty that still pertains to many of the economic assumptions
and their input values. Arguably more important than this is the value of the CO2 mitigation
impact, especially from the few estimates of the negative radiative forcing impact. If these are
correct the global mitigation benefit from this effect alone could be worth $1.1 trillion (assuming a
shadow carbon value of $25 per tonne abated). This sum is over two orders of magnitude greater
than the value of the other effects and yet has the least research to support. Furthermore unless
and until carbon markets allow abatement through the negative radiative forcing effect to be
eligible for carbon credits, which is not currently the case, this value is of a theoretical public
good nature and offers no self‐interest economic value to private sector actors. In general the
existing assessments of UHI countermeasures provide quite crude assessments of cost‐benefits
and there is a considerable need to improve them; however, they leave the impression that the
weight of evidence favors adopting UHI countermeasures on a large scale, especially as one of
the win‐win or low cost means of addressing climate change. When the value of all other public
and private good factors are considered: improved local air quality, lowered energy costs,
enhanced greenery, increased nighttime road safety etc. it is probable the economic arguments
favor the adoption of UHI countermeasures and especially cool roofs.
5.4.1 Cool Roofs
Cool roofs can already be a cost effective option especially in hot areas and especially in
commercial buildings. The insulation levels in the ceiling and roof space are a major factor
influencing the cost effectiveness of cool roofs as are the degree of air conditioning use and
whether the savings occur at peak power demand or not (increasingly they do as utilities around
the world are moving toward summer peaking at latitudes progressively further from the
equator). For example over a twenty year period a cool roof retrofit in Phoenix (AZ) for a ceiling
with only R5 insulation levels will save peak power costs of roughly $130 per m 2 of roof whereas
if the insulation is R20 level this falls to $30/m 2 . In Chicago the figures are typically $34/m 2 for R5
insulation and $8/m2 for R20 insulation levels, thus if the insulation value is quadrupled the
savings from the cool roof are quartered. The value of the heating penalty is generally very small
however in comparison to this.
Other factors of relevance to this are:
� the aged performance of the cool roof
� commercial sector roof replacement can often be done at zero cost premium compared to
a conventional roof replacement
� commercial sector retrofit where the sole motivation is energy efficiency improvement is
not cost‐effective in most cases
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