A control model of policy uncertainty and energy R&D investments

Ekundayo Shittu and Erin Baker

International Journal of Global Energy Issues, 2009, vol. 32, issue 4, 307-327

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.

Keywords: policy uncertainty; carbon tax; research and development; R&D investment; energy investment; optimal control modelling; non-carbon technologies; investment risk; investment decisions. (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijgeni:v:32:y:2009:i:4:p:307-327

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