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Sensitivity of energy system investments to policy regulation changes: Application of the blue sky catastrophe

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  • Bondarev, Anton
  • Weigt, Hannes

    (University of Basel)

Abstract

In this paper we argue, that the interaction of technology and economic policy regulations in the energy sector may be described by the so-called slow-fast class of dynamical systems. It is known that such systems may exhibit the blue sky catastrophe, a special type of bifurcation. Application of this result allows us to argue that caution is needed when updating economic policies in the energy sector to avoid the onset of catastrophic developments in the system's transformation, when energy system dynamics becomes unresponsive to policy updates.

Suggested Citation

  • Bondarev, Anton & Weigt, Hannes, 2017. "Sensitivity of energy system investments to policy regulation changes: Application of the blue sky catastrophe," Working papers 2017/08, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2017/08
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    energy infrastructure; investments cycle; economic policy; slow-fast systems; blue sky catastrophe;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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