Natural gas, uncertainty, and climate policy in the US electric power sector

John Bistline

Energy Policy, 2014, vol. 74, issue C, 433-442

Abstract: This paper investigates how uncertainties related to natural gas prices and potential climate policies may influence capacity investments, utilization, and emissions in US electricity markets. Using a two-stage stochastic programming approach, model results suggest that climate policies are stronger drivers of greenhouse gas emission trajectories than new natural gas supplies. The dynamics of learning and irreversibility may give rise to an investment climate where strategic delay is optimal. Hedging strategies are shown to be sensitive to the specification of probability distributions for climate policy and natural gas prices, highlighting the important role of uncertainty quantification in future research. The paper also illustrates how this stochastic modeling framework could be used to quantify the value of limiting methane emissions from natural gas production.

Keywords: Natural gas; Uncertainty; Electricity; Stochastic programming (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421514004704
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:74:y:2014:i:c:p:433-442

DOI: 10.1016/j.enpol.2014.08.017

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().