Investment risks under uncertain climate change policy

• Published in: Energy policy Vol. 35; no. 11; pp. 5766 - 5773
• Main Authors: Blyth, William, Bradley, Richard, Bunn, Derek, Clarke, Charlie, Wilson, Tom, Yang, Ming
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01.11.2007; Elsevier; Elsevier Science Ltd
• Series: Energy Policy
• Subjects: Applied sciences; Carbon; Climate change; Climate policy; Coal-fired power plants; Decision making; Decision making models; Economic data; Electric energy; Electricity; Electricity generation; Energy; Energy economics; Energy policy; Environmental economics; Environmental policy; Exact sciences and technology; General, economic and professional studies; Global warming; Investment; Methodology. Modelling; Real options analysis; Regulation; Regulatory risk; Risk factors; Risk management; Risk premiums; Studies; Uncertainty; Decision-making; Electricity; Regulatory risk; Company; Uncertainty; Gas fired power station; Decision making; Pollution control; Pollution prevention; CO2 sequestration; Risk analysis; Energy industry; Combined cycle; Coal power plant; Financial option; Regulation policy; Electric power production; Private sector; Investment

This paper describes results from a model of decision-making under uncertainty using a real options methodology, developed by the International Energy Agency (IEA). The model represents investment decisions in power generation from the perspective of a private company. The investments are subject to...