A control model of policy uncertainty and energy R&D investments. (1st April 2010)

• Record Type: Journal Article
• Authors: Shittu, Ekundayo; Baker, Erin
• Is Part Of: International journal of global energy issues. Volume 32:Number 4(2009)
• Page Start: 307
• Page End: 327
• Publication Date: 2010-04-01
• Subjects: policy uncertainty -- carbon tax -- research and development -- R&amp -- amp -- D investment -- energy investment -- optimal control modelling -- non-carbon technologies -- investment risk -- investment decisions; Power resources -- Periodicals; 333.79
• Languages: English
• ISSNs: 0954-7118

Abstract

Using an optimal control model, we explore the reaction of a firm's optimal investment into an R&D program that aims at non-carbon technologies under uncertainties about a future carbon tax. We find; first, that the influence of risk on investment decisions depends on model formulation. Second, near-term investments decrease in risk in the magnitude of a carbon tax, but increase in uncertainty in the timing of a carbon tax.