6. Project Evaluation and Ranking

Project evaluation and ranking is one of the one important parts of a CAP. This section discusses techniques and methods for undertaking these tasks. Also see the sections on Evaluating Energy Conservation Projects, Avoid the Short Payback Trap, and Revolving Funds.

6.1 Calculating Project GHG Emissions Reductions

While you can use carbon emissions calculators to determine carbon emission reductions associated with specific projects, these calculations are easy to do and can also be done with a simple calculator or a spreadsheet of your own design.

To perform these calculations for energy conservation or renewable energy projects, the first step is figuring out how much energy they save. Well known engineering formulas can be used to calculate energy savings. Then, apply the GHG conversion factors to the amount of energy saved by various fuel types to produce the GHG emissions reductions they achieve as measured in kg or metric tons of CO2 equivalent.

To convert purchased electricity savings into GHG emissions reductions, it is necessary to identify the conversion factor appropriate to your regional grid since the mix of power generation types and carbon-intensity of electricity generation differs from region to region. This kilowatt hour-to-CO2 conversion factor can be obtained by consulting the eGrid website.

To better understand how to calculate the GHG emissions associated with the consumption of various fuel and electricity, see the U.S. Environmental Protection Agency’s Clean Energy Calculations and References webpage. This resource contains numerous sample calculations.

6.2 Decision-Making Criteria

As the previous section of this climate action planning guide makes clear, there are many types of action your campus can take to reduce its carbon footprint. One of the most daunting tasks involved in assembling your CAP is evaluating, ranking, and deciding when to do what. A comprehensive list of criteria for evaluating, prioritizing, and selecting projects might look like this:

• Potential for meaningful GHG emissions reductions
• Initial project costs and lifecycle costs
• Project savings (if any, and don’t forget future escalation)
• Availability of funding from various sources including campus budgets, borrowing, incentives from government and utilities, and grants from foundations
• Payback, return on investment (ROI), Net Present Value (NPV), or Internal Rate of Return (IRR)
• Project lifespan
• Cost effectiveness or efficacy in producing GHG emissions reductions ($/MTCO2e)
• Other costs, e.g. maintenance costs, impacts on safety, health, comfort, or productivity
• Other benefits, e.g. maintenance savings; capital improvement; improved safety, comfort, or productivity; public relations value, etc.
• Relationship to other possible energy saving or GHG emissions mitigation measures and opportunities for synergy
• Interaction with state or regional GHG mitigation initiatives (e.g. the Regional Greenhouse Gas Initiative which affects fossil fuel power generators of 25 MW or greater in 10 Northeast and Mid-Atlantic states)
• Potential to scale upward; transferability
• Academic impact -- involvement of faculty and students for learning and research purposes
• Research impact
• Organizational capacity to undertake and manage the project
• Alignment with campus capital development plan, strategic and other plans
• Stakeholder support and enthusiasm

Proposed projects can be compared on the basis of any or all of these factors. Typically, a CAP will list prospective projects on a chart noting:

• Project cost
• Savings
• Payback, ROI, NPV, or IRR (specifying discount rates and time frame)
• Carbon reduction
• $/MTCO2e

Some of the above decision-making criteria cannot easily be quantified. But comparative information could be captured in a comprehensive matrix which could rank projects on as many of those criteria as possible. Conceivably, most or all of the above decision-making factors could be considered in a comprehensive lifecycle analysis of prospective carbon mitigation projects and measures. Note that there is an in-depth discussion of payback and lifecycle cost analysis for energy conservation projects in this manual.

6.3 Carbon Reduction Efficacy

Let’s take a closer look at the cost of a project in relation to its ability to produce GHG emissions reductions, i.e. cost per MTCO2e. This type of evaluation – which can be called carbon reduction efficacy – is important because it shows which projects produce the biggest bang for the buck in terms of carbon reduction.

The illustration below graphically shows how a $/MTCO2e analysis of projects can be presented.

Image courtesy of Clean Air-Cool Planet

The bars depict and compare four theoretical carbon reduction projects or measures. The two on the left side of the chart -- represented by bars that descend below the zero line -- have negative net present values per ton of carbon dioxide mitigated and thus produce overall dollar savings. The projects on the right side of the graph -- represented by bars that extend over the zero line -- have positive net present values and do not produce savings in amounts greater than their costs. The projects are arrayed from left to right in order of most attractive to least attractive in terms of their carbon reduction efficacy or cost/offset ratio. The width of each measure shows the overall GHG reduction that results from the measure.

This type of analysis and chart-making can be accomplished automatically through the use of the Solutions Module in Version 6 of the Clean Air-Cool Planet Campus Carbon Calculator -- though the Calculator can only undertake these operations after you enter specific project data.

The next graph is from Charting a Path to Greenhouse Gas Reductions by Sam Hummel, former Environmental Sustainability Coordinator at Duke University. It shows specific projects under consideration at Duke during a study in 2005. Several are identified by letter in the key just below the graph. Purchasing new high capacity buses (measure A) would provide Duke with dollar savings at an attractive carbon reduction return per dollar invested but not much overall carbon reduction. In contrast, reducing coal burning in Duke’s power plant by burning more natural gas (measure R) costs Duke money and has a long payback, but will produce a large carbon emissions reduction.

Reprinted from "Charting a Path to Greenhouse Gas Reductions" with permission of Duke University.

Key for some measures shown on graph above:

A - Purchase high capacity buses
H - Co-fire biomass in steam plant
L - Purchase wind power
R - Natural Gas Blend in Steam Plant
S - Install solar electric system

It is clear that carbon mitigation efficacy is an important decision-making criteria when evaluating and prioritizing carbon reduction projects and measures. However, as the discussion in the Energy Conservation and Efficiency section should make clear, many other considerations may be equally important.