The case for Centres of Excellence in sustainable building design

More documents

Recommendations

Info

By 2050 the carbon abatement potential of the project is nearly 11 million tCO2 per annum. This represents around 6% of the abatement required in the built environment to achieve an 80% reduction in line with UK targets. Thus, whilst this analysis indicates that the potential of the project is significant, it in no way approaches the limit of carbon abatement available from the building sector. Net present value The net present value of the carbon abatement achieved by graduates from the Centres of Excellence is calculated by applying the £102/tCO2 MAC determined above to the cumulative carbon dioxide savings achieved and applying a discount rate of 3.5%. In order to evaluate the actual benefit of this project it is necessary to further account for the marginal costs of training and employing the graduates from the Centres of Excellence using the education marginal cost and employment marginal costs, also discounted at 3.5%. The overall net value of the project is given in table 7 for two scenarios: firstly, if the project were to end abruptly in 2030 the date for completion of low carbon domestic retrofits; and, secondly, if it were to end in 2050 the target date for the UK carbon reduction programme. In both these scenarios the marginal costs of education and employment are included in full up to the final year. In reality if the project were to wind down, training costs would diminish towards the end of the period. This analysis also applies no value to the future carbon abatement beyond the analysis period achieved during the project. Table 7: Net present value of project costs and benefits Final year NPV running cost NPV employment NPV MAC carbon Net value of of project for centres cost premium emissions abated project in 2012 2030 -£52,758,727 -£11,349,417 £1,231,259,384 £1,167,151,241 2050 -£83,364,349 -£22,602,248 £6,838,381,569 £6,732,414,972 62 The Royal Academy of Engineering
Sensitivities Sensitivities Since the analysis is dependent upon a number of assumptions, it is necessary to establish how sensitive the project value is to the different assumptions. In order to validate the assumptions we test the sensitivity of the project NPV to variations in the assumptions. To make the tests more sensitive the NPV of the project to the year 2030 is used rather than the much higher NPV of the project should it run out to 2050. Value of carbon emissions abated Since the value is the product of the MAC and the carbon abatement achieved, which in turn is the product of the number of graduates and the abatement potential per graduate per year, it follows that the NPV is equally sensitive to all of these starting assumptions. Further, since the MAC is derived from assumptions in interpreting the McKinsey curves and in applying the weightings to differentiate between business as usual and the project scenario, it follows that a test of the sensitivity to the overall value is equally a test of the assumptions contained in the weightings. Nevertheless, the model was tested for sensitivity against MAC, number of graduates per year and carbon abatement per graduate per year. A change of 1% in any of the input assumptions results in a change in NPV of fractionally more than 1%. The results of this sensitivity test are given in Table 8. Table 8: Sensitivity of the NPV to the value of carbon emissions abated (testing assumptions underlying the MAC and to the abatement potential of graduates Test value Project NPV to 2030 Change from baseline 10.0% £1,289,973,402 10.5% 5.0% £1,227,312,703 5.2% 2.5% £1,194,724,352 2.4% Baseline £1,167,151,241 0.0% -2.5% £1,137,528,743 -2.5% -5.0% £1,106,686,818 -5.2% -10.0% £1,046,112,986 -10.4% The response of the NPV to changes in the assumptions leading to the value of carbon abated is more or less linear. The carbon abatement potential of one graduate would have to drop to just 13.9 tCO2 per annum in order for the NPV of the project to turn negative. Similarly the graduates from Centres of Excellence would The case for Centres of Excellence in sustainable building design 63
Page 1 and 2:
Text to put in Master reference dra
Page 3 and 4:
Master reference drawn 03.09.04 The
Page 5 and 6:
Foreword Foreword The demanding cli
Page 7 and 8:
Executive summary Executive summary
Page 9 and 10:
Executive summary and zero carbon n
Page 11 and 12:
Executive summary Thus, by comparin
Page 13 and 14: Introduction Introduction The UK’
Page 15 and 16: Introduction Lord Stern [2006] esti
Page 17 and 18: Low carbon construction Low carbon
Page 19 and 20: Low carbon construction Furthermore
Page 21 and 22: Low carbon construction much daylig
Page 23 and 24: Low carbon construction Persistent
Page 25 and 26: Low carbon construction skills Low
Page 27 and 28: Low carbon construction skills Low
Page 29 and 30: Low carbon construction skills Duri
Page 31 and 32: Low carbon construction skills The
Page 33 and 34: Low carbon construction skills benc
Page 35 and 36: Centres of Excellence The body of k
Page 37 and 38: Centres of Excellence Germany has a
Page 39 and 40: References ONS. 2011a. Construction
Page 41 and 42: Appendix 1 needs set out above. Dep
Page 43 and 44: Appendix 1 parties, should not be d
Page 45 and 46: Appendix 1 an architecture departme
Page 47 and 48: Appendix 1 Over time, the Centres o
Page 49 and 50: Appendix 1 Table 2: A typical staff
Page 51 and 52: Appendix 2 Appendix 2: Estimating t
Page 53 and 54: Appendix 2 development in industry,
Page 55 and 56: Appendix 2 Additionally, it is assu
Page 57 and 58: Appendix 2 This is achieved in the
Page 59 and 60: Appendix 2 or technique. The annual
Page 61 and 62: Appendix 2 • further weighting ha
Page 63: Estimated results Figure 5: Cumulat
Page 67 and 68: Sensitivities Discount rate Table 1
Page 69: Conclusion While the results are de
show all

The case for Centres of Excellence in sustainable building design

Create successful ePaper yourself

Delete template?

Save as template?