Uncertainty modeling of CCS investment strategy in China's power sector

Zhou, W., Zhu, B. ORCID: https://orcid.org/0000-0002-2890-7523, Fuss, S., Szolgayova, J., Obersteiner, M. ORCID: https://orcid.org/0000-0001-6981-2769, & Fei, W. (2010). Uncertainty modeling of CCS investment strategy in China's power sector. Applied Energy 87 (7) 2392-2400. 10.1016/j.apenergy.2010.01.013.

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Project: Climate Change - Terrestrial Adaption and Mitigation in Europe (CCTAME, FP7 212535)


The increasing pressure resulting from the need for CO2 mitigation is in conflict with the predominance of coal in China's energy structure. A possible solution to this tension between climate change and fossil fuel consumption fact could be the introduction of the carbon capture and storage (CCS) technology. However, high cost and other problems give rise to great uncertainty in R&D and popularization of carbon capture technology. This paper presents a real options model incorporating policy uncertainty described by carbon price scenarios (including stochasticity), allowing for possible technological change. This model is further used to determine the best strategy for investing in CCS technology in an uncertain environment in China and the effect of climate policy on the decision-making process of investment into carbon-saving technologies.

Item Type: Article
Uncontrolled Keywords: Carbon capture and storage; Uncertainty; Real options; Energy investment; Chinese climate policy
Research Programs: Energy (ENE)
Forestry (FOR)
Bibliographic Reference: Applied Energy; 87(7):2392-2400 (July 2010) (Published online 13 February 2010)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:44
Last Modified: 27 Aug 2021 17:21
URI: https://pure.iiasa.ac.at/9280

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