RepuTex cost curve and the land sector
RepuTex has pumped out marginal abatement cost (MAC) curve for the post carbon price era. Does it tell us anything new about land projects? Maybe.
First, MAC curves. They show a lot of different abatement opportunities in the one picture – each box shows the potential of the opportunity (width) and the likely cost for each tonne (height). Opportunities are stacked from least expensive on the left to the most expensive on the right.
They used to be all the rage. McKinsey kicked it off in 2008 with its definitive curve for Australia. They reckoned a 37% reduction by 2020 was plausible, as against business-as-usual. ClimateWorks got in on the act in 2010 – they were less bullish, putting the 2020 potential at 25%. Now the newly minted RepuTex baby has pulled the numbers down again – their updated curve puts the 2020 potential at just 5%!
Hold on to your hat, what’s going on? Well, 7 years have passed by since McKinsey rolled out the concept. Time has been lost. We’ve also hit a point where electricity demand is falling – this means that business-as-usual doesn’t see growth, growth, growth anymore. Importantly, though, the RepuTex curve also takes away a carbon price from the policy kit and therefore removes expensive items – there will not be enough incentive for them. So the message is we are in a place where cuts are now harder – reality and policy is working against easy cuts.
Back to the land. The good news for land abatement is that RepuTex still thinks land projects are achievable at moderate price. The price might have gone up a bit from the lower ClimateWorks estimates, but savanna burning is stacked towards the left end is definitely a prospective activity. The width of the agriculture and forestry bars also means there is still a lot of potential for the land sector to do good things.
Let’s do them!