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Ii) EMA Tools For Investment Appraisal

This section discusses various tools available for internal decision making regarding environmental activities in business. These tools are categorized into cost analysis, investment appraisal, and performance management. Cost analysis includes life cycle assessment, activity based costing, and material flow cost accounting. Investment appraisal uses total cost assessment to analyze investments. Performance management can incorporate environmental balanced scorecards to measure performance comprehensively.

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Annie Katherin
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56 views

Ii) EMA Tools For Investment Appraisal

This section discusses various tools available for internal decision making regarding environmental activities in business. These tools are categorized into cost analysis, investment appraisal, and performance management. Cost analysis includes life cycle assessment, activity based costing, and material flow cost accounting. Investment appraisal uses total cost assessment to analyze investments. Performance management can incorporate environmental balanced scorecards to measure performance comprehensively.

Uploaded by

Annie Katherin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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This section explains the various tools available for internal decision making by considering the

environmental activities in business. The techniques of decision making are categorized under
the three main groups, namely, Cost Analysis, Investment Appraisal and Performance
Management

Cost Analysis includes Life Cycle Assessment (LCA), Activity Based Costing (ABC) and Material
Flow Cost Accounting.

a) Life Cycle Assessment (LCA)


Environment professionals have acknowledged that the production activities may affect supplies
of natural resources and the environment quality; the adverse environmental impacts may occur
at each stage in product life cycle. A means to examine the environmental impacts of a product
or activity across its entire life cycle from raw materials until disposal is called Life Cycle Analysis

b) Activity Based Costing


The Activity Based Costing enables firms to allocate all cost, including environmental cost,to the
Cost Centers and Cost Drivers based on the activities. The ABC will create more accurate cost
information not only for better product pricing but also for reducing entire cost and supporting
pollution prevention projects

c) Flow Cost Accounting (FCA)


Material Flow Analysis is basically intended to define the material and energy flows moving
through a value creating system (such as business) over a certain period. Incorporating EMA
perspective, the flow cost accounting includes evaluation of cleaner production potential at the
plant level, preliminary estimate of waste generation costs and in-depth analysis of selected
assessment of quantification of the volume and composition of various waste and energy streams
and emissions as well as a detailed understanding of the causes of these waste and energy
streams and emissions.

ii) EMA Tools for Investment Appraisal


An EMA tool for investment appraisal is the Total Cost Assessment (TCA) which is basically an
analysis based on capital budgeting.
a) Total Cost Assessment (TCA)
The Total Cost Assessment includes environmental costs into capital budgeting analysis. It
identifies economic cost and areas of cost savings from pollution prevention in traditional costing
analysis. the TCA is defined as the long-term, comprehensive financial analysis of the full range
of costs and savings of an investment experienced by the organization making the investment.
The TCA is beneficial in assessing an investment project and conducting budgeting analysis

ii) EMA Tool for Performance Management


Balanced Scorecard assists entities to measure comprehensively, including environmental
concerns, in terms of performance management or evaluation.
Environmental Balanced Scorecard (EBS)
Environmental perspectives can be incorporated into balanced scorecard. EBS can act as a
comprehensive performance management tool in an organisation. EBS is a set of measurements
that give top managers a fast but comprehensive view of the business, including the effects of
operational and environmental measures on different company perspectives such as customer
satisfaction, internal improvement, research and training, and financial and other perspectives
related to business strategy

An assessment of AGL’s plan found the replacement generation is more affordable at $83/MWh,
compared with extending Liddell at $106/MWh.

AGL’s proposed portfolio to replace Liddell will shrink its carbon footprint by 17.6%.

The plan was also found to deliver reliable, dispatchable power for longer, due to a longer asset
life of 15-30 years, compared with a Liddell extension of five years.

Keeping the Liddell coal-fired power station open beyond 2022, as Malcolm Turnbull has urged,
could cost more than $900m, AGL says, with representatives of the energy company saying the
station should be shut.
It was very rare for power stations to be used beyond 50 years and noted that there was 4000MW
of renewable generation in the pipeline, which could make up for the lost energy from Liddell.

Liddell shares infrastructure with Bayswater Power Station – such as coal unloading facilities and
water systems – separating it would require duplication of this infrastructure.

AGL has confirmed its plans to close the Liddell coal generator in NSW and replace it with 1.6GW
of renewables, plus storage and other technologies – saying it was a smarter, cheaper, cleaner
and more reliable option than keeping the ageing and unreliable coal plant open.
AGL’s proposal is cleaner & cheaper and old power plants can be replaced with a mixture of
cleaner technology

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