The Shire of Fabricated is a local government area in the Hunter Valley region of NSW in Australia. As part of its sustainability strategy, it is looking to reduce the greenhouse gas emissions from its activities. Following an internal “GHG emissions reduction” workshop it has the following proposed set of emissions reductions as the possible kick-off measures.

1. The Shire could install timers on 25 urns across its facilities to turn them off overnight and at weekends. Each timer costs $40 and saves 950 kWh per annum. The Shire pays $30c/kWh on a flat rate tariff for electricity from the grid.

2. The Shire could switch 12 leased corporate cars (previously running only on petrol) to hybrid vehicles on a 5-year contract, with each car costing an additional $1,600 per annum to lease. On average each car travels 24,500 km a year. Due to long-term contracting (5 years) petrol costs the Shire $1.35/L. The fuel consumption of the hybrid vehicles is expected to be 3.4L/100km with the current cars having an average fuel consumption of 9.5L/100km.

3. The Shire currently purchases Greenpower (all renewable electricity) from a nearby windfarm at a cost of 4c/unit above the price of standard electricity (30c/kWh) to cover all the consumption from its Regional Library and Visitor Centre building and associated Eco playground. This facility consumes 70,400kWh a year. Due to an agreement with the local retailer this Greenpower price is expected to remain at 34c/kWh for the next 5 years.

4. The Shire would buy 750 tonnes of Certified carbon credits per year, generated from a private independently owned native forest regeneration project within the local government area. These credits are available at a fixed price of $35.00 per credit (equivalent to 1 tonne) on a 5-year contract.

5. The City can replace the existing bulbs in one of its facilities with LEDs. This will require a capital cost of $9,200 but will result in an energy saving of 40% on each light, for an estimated total of 18,500 kWh saved a year. Following a discussion with the City’s Financial Officer the following assumptions should be used in all calculations:

• The Shire usually uses a discount rate of 4.75%.

• All of the capital projects are assumed to have a financial lifetime of 5 years including the commencement year.

• All capital costs are considered expended in the first year.

• All prices include GST.

• All emissions factor values to be used are those in the 2021 Australian National GHG Accounts Factors.

Calculate the following:

i. The NPV ($), emissions abated and long run average abatement cost for each project.

ii. From this construct an average abatement cost curve (AAC) including all of the projects