Policy uncertainty and investment in low-carbon technology, Silvia Albrizio and Hélia Costa
Type
Label
Policy uncertainty and investment in low-carbon technology, Silvia Albrizio and Hélia Costa
Language
eng
Abstract
In the context of an emission trading scheme (ETS), we study how uncertainty over the environmental policy affectsfirms' investment in low-carbon technologies. We develop a three period sequential model that combines the industry and the electricity sectors and encompasses both irreversible and reversible investment possibilities for the firms. Additionally, we explicitly model the policy uncertainty in the regulator's objective function as well as the market interactions that give rise to an endogenous price of permits. We find that uncertainty reduces irreversible investment and that the availability of both reversible and irreversible technologies partially eliminates the positive effect of policy uncertainty on reversible technology found in previous literature. Furthermore, we provide a framework that allows to assess the efficiency of different implementations of the scheme
Index
no index present
Literary Form
non fiction
Main title
Policy uncertainty and investment in low-carbon technology
Oclc number
827953709
Responsibility statement
Silvia Albrizio and Hélia Costa
Series statement
EUI working papers. ECO, 2012/27EUI papers
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