The Option Value of Investments in Energy-Efficient and Renewable Energy Technologies
AbstractThis paper takes up the need to engage in substantial investments in the energy producing capital stock to attack the climate change problem, caused by rising carbon dioxide concentrations in the atmosphere. However, the precise magnitudes of economic impacts of global warming as well as abatement and mitigation costs of climate change are not known and may be learned after time. Thus preferences to restrict or to loosen environmental objectives and related emission levels might change and are reflected in an uncertain “price” for environmental usage (e.g. emission tax, marketable permits). As a consequence investors face some uncertainty and need to take the option value of their investments in the energy producing capital stock into account and tend to delay their investment. Considering long usage periods and indivisibilities of power production investments adequate environmental policy has to be designed in a way to reduce uncertainty for investors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Duesseldorf University of Applied Sciences in its series Duesseldorf Working Papers in Applied Management and Economics with number fobe13.
Length: 24 pages
Date of creation: Nov 2010
Date of revision:
Publication status: Published in Forschungsberichte des Fachbereichs Wirtschaft der Fachhochschule Duesseldorf ; 2010,13 ; ISSN 1866-2722
Contact details of provider:
Climate Change; Option Value; Investment Uncertainty; Renewable Energy; Klimawandel; Optionswerte; Investitionsunsicherheit; Erneuerbare Energien;
Find related papers by JEL classification:
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiebke Voges).
If references are entirely missing, you can add them using this form.