Investments in EOP-technologies and emissions trading - Results from a linear programming approach and sensitivity analysis
AbstractThis paper offers a general approach to valuating investments in end-of-pipe-technologies (EOP-technologies) with special regard to an emissions trading scheme. Since investments of this kind affect production, it is necessary to derive the required payments for a financial valuation and the constraints from production theory and production planning. On this basis, it is possible to develop a valuation model. This model considers joint production, activity-level-dependent and -independent payments and specifically includes the indivisibility of the investment. Applying duality theory enables us to examine the determinants of the price ceiling for such an investment. Sensitivity analysis shows that tradable permits have several effects on an investment and do not always encourage environmentally beneficial investments - in particular cases they may even be counterproductive.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 196 (2009)
Issue (Month): 1 (July)
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Web page: http://www.elsevier.com/locate/eor
Environment Linear programming Investment analysis (Corrected) Net present value Sensitivity analysis;
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