 Climate change and optimal energy technology R&D policyErin Baker and Senay Solak European Journal of Operational Research, 2011, vol. 213, issue 2, 442-454 Abstract: Public policy response to global climate change presents a classic problem of decision making under uncertainty. Theoretical work has shown that explicitly accounting for uncertainty and learning in climate change can have a large impact on optimal policy, especially technology policy. However, theory also shows that the specific impacts of uncertainty are ambiguous. In this paper, we provide a framework that combines economics and decision analysis to implement probabilistic data on energy technology research and development (R&D) policy in response to global climate change. We find that, given a budget constraint, the composition of the optimal R&D portfolio is highly diversified and robust to risk in climate damages. The overall optimal investment into technical change, however, does depend (in a non-monotonic way) on the risk in climate damages. Finally, we show that in order to properly value R&D, abatement must be included as a recourse decision. Keywords: R&D; portfolio; Energy; technology; Climate; change; Stochastic; programming; Public; policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:213:y:2011:i:2:p:442-454 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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