FarmGAS Calculator and Financial Tool upgrade

The Australian Farm Institute (AFI) FarmGAS Calculator is a tool for assisting farmers, extension providers and researchers to investigate how different farm management practices may alter greenhouse gas (GHG) emissions at an enterprise or whole farm level. The FarmGAS Calculator has been a free service managed by the AFI since 2009.

An upgrade of the FarmGAS Calculator (version-4) is currently underway – for public launch in June 2014. Version-4 will offer advanced functionality, such as the capability to assist in the financial analysis associated with farm business GHG emissions management projects – including participation in the Carbon Farming Initiative (CFI).

The CFI is an Australian Government voluntary carbon offset scheme. The initiative allows participants to earn carbon credits by reducing their GHG emissions and storing carbon in the landscape through changes to agricultural and land management practices. The upgrade and development of the FarmGAS Calculator is supported by funding from the Australian Government.

FarmGAS version-4 will be a collaborative effort between the AFI and the University of Southern Queensland Australian Centre for Sustainable Business and Development.

Project Plan

The updated FarmGAS Calculator will include an online Marginal Abatement Cost Curve (MACC) tool and modifiable Model Farms that can be used by farmers, extension providers and researchers to help assess the financial implications of adopting a range of GHG emissions abatement practice changes and investments.

The project’s key activities include:

  • To identify, test and review an online decision support tool which is made available to farmers and extension providers. See accompanying Box 1 on MACCs.
  • Model Farms will be developed and made available in a way which will allow modification by decision support tool users and will encourage new users to learn more about the FarmGAS Calculator.
  • To complete and provide User Guides that assist in the application of the decision support tools.

Box 1: What is a MACC?

MACCs were first developed after the oil price shocks in the 1970s, with the initial aim of reducing crude oil consumption and later electricity consumption (FAO 2012). Over the last 20 or so years MACCs have been used to provide quick comparisons of the cost-effectiveness of GHG mitigation and carbon sequestration options between different methods of abatement. McKinsey & Company have been a leading research entity developing MACCs as useful tools for policy-makers and businesses to prioritise carbon abatement methods.

The MACC histogram shown below assesses the cost and reduction potential of carbon abatement methods with each methods bar width representing the abatement potential, the height representing the average cost (in €) per unit (tonne of carbon dioxide equivalent: tCO2e) of abatement and the area of each bar representing the total comparable cost of each abatement method. The cost-effectiveness of the carbon abatement method reduces when moving along the MACC histogram from left to right.

The best use of a MACC however is identifying which abatement method either (1) reduces emissions and saves money or (2) reduces emissions at an indicative cost. For example, the MACC histogram below showed switching to incandescent lighting was the most cost-effective method per unit of carbon abatement. The MACC also showed coal carbon capture storage retrofit is one method that would provide a large amount of carbon abatement, but at a cost of approximately €40 per tonne of carbon dioxide equivalent that was being reduced.

 

Figure 1:  Global GHG abatement cost curve beyond business-as-usual – 2030.
Source:     McKinsey & Company (2009).

 

References

Food and Agriculture Organization of the United Nations (2012), Using Marginal Abatement Cost Curves to Realize the Economic Appraisal of Climate Smart Agriculture Policy Options. 

McKinsey & Company (2009), Pathways to a Low-Carbon Economy – Version 2 of the Global Greenhouse Gas Abatement Cost Curve, available at: www.mckinsey.com/client_service/sustainability/latest_thinking/greenhouse_gas_abatement_cost_curves

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Images:  Clare Bellfield, Kate B Dixon, USDA