An appropriate price for ACCUs in the business case is subject to considerable uncertainty, despite the market prices that have emerged after the first rounds of auctions under the ERF.
ACCUs are generated by activities well beyond carbon farming. Their price may be determined by activities with lower cost structures (and risks) than carbon farming.
The price of ACCUs is therefore a major risk factor for any ERF project. For the analysis presented in the remainder of this manual, a range of ACCU prices is used, reflecting this uncertainty.
As is demonstrated further in Chapter 10, this form of sensitivity analysis (and in some cases, threshold analysis) is a powerful way of quantifying risk when developing a business case.
Put another way, given the uncertainty about ACCU prices, a business case should not rely on a single price but should examine the implications of a variety of prices. Some prices will result in a viable project; others will not. The threshold price that determines this difference is a crucial number to understand.
Explore the full Workshop Manual: The business case for carbon farming: improving your farm’s sustainability (January 2021)
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1. Introduction: background to the business case
This chapter lays out the basic background and groundwork of the manual
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1.2 Being clear about the reasons for participating
Introduction: background to the business case
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1.4 Working through the business case for carbon farming
Introduction: background to the business case
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1.5 Factors determining project economics
Introduction: background to the business case
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1.8 Important features of the business case
Introduction: background to the business case
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2. How carbon is farmed under the ERF
This chapter considers in detail the activities that constitute carbon farming
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2.5 Carbon farming under the Emissions Reduction Fund
How carbon is farmed under the ERF
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3. The policy context and the price of ACCUs
This chapter takes a broad look at the policy context for carbon farming
