Project Appreciation and Objectives
Changing guidance and regulation, uncertain accounting boundaries and different accounting methodologies and emission factors make it far from simple to integrate carbon into the decision process. Additionally, the influence of the cost of carbon adds a layer of financial complexity in any estimates for future schemes. Companies need estimates to be accurate and transparent when using them to justify investment to the regulators and to the Board.
This project will develop an integrated cost and carbon reduction scenario modelling tool to allow water companies to determine, among others:
- Emission reduction strategies that deliver most benefits in terms of cost and carbon reductions, for a given time horizon.
- The cost-benefit of existing and planned abatement strategies.
- The tipping points (in terms of energy prices, carbon price and emissions factors) for different combinations of policy options to be cost-effective.
Benefits to Clients
- Cost savings from the selection of carbon abatement options which can be implemented at the least cost.
- Optimisation of economic benefits from incentives for renewable energy generation.
- Embodied and operational carbon models ready to be incorporated in the company business plans, and requiring the least amount of data input.
- Proactive identification of least cost strategies for CRC allowance trading.M/li>
- Define potential abatement options and data requirements for the model.
- Map out the relations between abatement options, carbon accounting methodologies and financial incentives taking into account current and forthcoming regulations and incentives.
- Develop and demonstrate the tool through examples of at project and strategy levels.
A spreadsheet-based economic tool to support decision making for carbon reduction strategies and incentives. Specific outputs from the tool will include:
- The net present cost (NPC) of abatement options/strategies to inform decisions based on an objective financial criterion.
- The average incremental cost (AIC), which is used to rank options based on their cost effectiveness.
- Marginal Abatement Cost Curves (MACCs) for a defined time period, to inform abatement strategies.
- Total cost / carbon curves for selected abatement option(s).
Related WRc Work
- Development and annual update of the UKWIR Carbon Accounting Workbook, 2008-2009.
- Development of Carbon Abatement Tool for major UK utility.
- Carbon costs in TR61 CAPEX and OPEX estimator, 2010.
- Carbon accounting for pipeline installation and rehabilitation, CP364, 2009-2010.,/ul>