This paper presents a real options model where multiple options are evaluated simultaneously so that the effect of the individual options on each other is accounted for. We apply this model to the electricity sector, where we analyze three typical technologies based on fossil fuel, fossil fuel...

This paper uses real options modeling to assess the impact of different climate change policy instruments on investment, profits and cumulative emissions in the electricity sector. Even though CO2 price caps or "safety valves" have been suggested as methods to limit uncertainty emanating from...

Ongoing negotiations under the UNFCCC center around the possibilities for stabilization of greenhouse gases at a “safe” level. New energy technologies are assumed to make major contributions to this goal. However, in the light of scientific uncertainty (e.g. about climate sensitivity,...

The price of EU allowances (EUAs) in the EU Emissions Trading Scheme (EU ETS) fell from almost 30€/tCO2 in mid-2008 to less than 5€/tCO2 in mid-2013. The sharp and persistent price decline has sparked intense debates both in academia and among policy-makers about the decisive allowance price...

In a regulated world where government seeks to decarbonize the energy sector, firms face both indirect and direct costs of emitting CO2. This study seeks to take the perspective of the firm, which needs to maximize profits implying minimization of (carbon) cost as well. In this study, the firm...

Recently, an active debate has emerged around greenhouse gas emissions due to indirect land use change (iLUC) of expanding agricultural areas dedicated to biofuel production. In this paper we provide a detailed analysis of the iLUC effect, and further address the issues of deforestation,...

From a biophysical perspective, woody biomass resources are large enough to cover a substantial share of the world's primary energy consumption in 2050. However, these resources have alternative uses and their accessibility is limited, which tends to decrease their competitiveness with respect...

An important concept in discussions of carbon management policies is cap and dividend, where some fraction of the revenues of an auction on emission allowances is returned to citizens on an equal per capita basis. This policy tool has some important features; it emphasizes the fact that the...

The provision of both electrical and mechanical energy services can play a critical role in poverty alleviation for the almost two billion rural users who currently lack access to electricity. Distributed generation using diesel generators remains a common means of electricity provision for...

The solar photovoltaic (PV) industry has undergone a dramatic evolution over the past decade, growing at an average rate of 48 percent per year to a global market size of 31GW in 2012, and with the price of crystalline-silicon PV module as low as $0.72/W in September 2013. To examine this...