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Tekijä:Fan, L.
Hobbs, B.F.
Norman, C.S.
Otsikko:Risk aversion and CO2 regulatory uncertainty in power generation investment: policy and modeling implications
Lehti:Journal of Environmental Economics and Management
2010 : NOV, VOL. 60:3, p. 193-208
Asiasana:investment
uncertainty
risk aversion
economic policy
simulation
pricing
air pollution
trading
Kieli:eng
Tiivistelmä:We inspect a simulation of risk-averse producers facing uncertainty about future carbon dioxide emissions regulation when they make investment decisions in a competitive energy market. Investments are made under regulatory uncertainty, following the revelation of regulations and realization of the returns for producers. We study anticipated taxes, grandfathered permits and auctioned permits and demonstrate that some anticipated policies fuel investment in the relatively dirty technology. Beliefs about the policy instrument used for carbon pricing may be as important as the certainty that carbon will be priced. More generally, failing to consider risk aversion can bias policy analysis for the power sector.
SCIMA tietueen numero: 276115
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