1 option
Infrastructure investments under uncertainty with the possibility of retrofit : Theory and simulations / Jon Strand
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Strand, Jon
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Climate Change Economics.
- Climate Change Mitigation and Green House Gases.
- Economic change.
- Energy.
- Energy and Environment.
- Energy Production and Transportation.
- Environment and Energy Efficiency.
- Environmental.
- Growth rates.
- Investment criteria.
- Transactions costs.
- Local Subjects:
- Climate Change Economics.
- Climate Change Mitigation and Green House Gases.
- Economic change.
- Energy.
- Energy and Environment.
- Energy Production and Transportation.
- Environment and Energy Efficiency.
- Environmental.
- Growth rates.
- Investment criteria.
- Transactions costs.
- Physical Description:
- 1 online resource (63 pages)
- Other Title:
- Infrastructure investments under uncertainty with the possibility of retrofit
- Place of Publication:
- Washington, D.C., The World Bank, 2011
- System Details:
- data file
- Summary:
- Investments in large, long-lived, energy-intensive infrastructure investments using fossil fuels increase longer-term energy use and greenhouse gas emissions, unless the plant is shut down early or undergoes costly retrofit later. These investments will depend on expectations of retrofit costs and future energy costs, including energy cost increases from tighter controls on carbon emissions. Simulation analysis shows that the retrofit option can significantly reduce anticipated future energy consumption as of the time of initial investment, and total future energy plus retrofit costs. The more uncertain are the costs, the greater the value of this option. However, the future retrofit option also induces more energy-intensive infrastructure choices, partly offsetting the direct effect of having the option on anticipated energy use. Efficient, forward-looking infrastructure investments have high potential for reducing long-term energy consumption. Particularly if energy prices are expected to rise, however, the potential for reduced energy consumption will be eroded if expectations of energy prices do not include environmental costs or future retrofit possibilities and technologies are not adequately developed.
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