IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-3-031-83487-5_11.html
   My bibliography  Save this book chapter

Project Valuation in Climate Crisis

In: Corporate Finance Under Climate Crisis

Author

Listed:
  • Sandra Dow

    (Middlebury Institute of International Studies at Monterey)

  • Yuwei Shi

    (University of California at Santa Cruz)

Abstract

This chapter explores the evolving landscape of capital budgeting in the context of climate change, emphasizing the integration of climate risks and opportunities into traditional project valuation techniques. It highlights the inadequacies of conventional methods such as PaybackPayback Period and IRRInternal Rate of Return (IRR) in addressing the long-term uncertainties of climate-sensitive investments. The chapter introduces advanced tools, including Levelized Cost of ElectricityLevelized Cost of Electricity (LCOE) (LCOE), Net Present ValueNet Present Value (NPV) (NPV), Shadow Pricing, and Real Options Analysis (ROA), to account for climate-related complexities. Through detailed case studies, such as Evergreen Wind Farm and Granite Peak Mine, the chapter illustrates how these tools are applied in real-world scenarios. LCOELevelized Cost of Electricity (LCOE) is presented as a critical metric for comparing renewable and fossil fuel-based projects, while Shadow Pricing incorporates carbon costs to align investments with regulatory trends. ROA demonstrates the value of flexibility in decision-making, enabling firms to defer, expand, or abandon projects based on changing conditions.”

Suggested Citation

  • Sandra Dow & Yuwei Shi, 2025. "Project Valuation in Climate Crisis," Springer Books, in: Corporate Finance Under Climate Crisis, chapter 0, pages 281-317, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-83487-5_11
    DOI: 10.1007/978-3-031-83487-5_11
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-3-031-83487-5_11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.