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.