Robust Energy Portfolios Under Climate Policy and Socioeconomic Uncertainty

Abstract

Concerning the stabilization of greenhouse gases, the UNFCCC prescribes measures to anticipate, prevent, or minimize the causes of climate change and mitigate their adverse effects. Such measures should be cost-effective and scientific uncertainty should not be used as a reason for postponing them. However, in the light of uncertainty about climate sensitivity and other underlying parameters, it is difficult to assess the importance of different technologies in achieving robust long-term climate risk mitigation. One example currently debated in this context is biomass energy, which can be used to produce both carbon-neutral energy carriers, e.g., electricity, and at the same time offer a permanent CO 2 sink by capturing carbon from the biomass at the conversion facility and permanently storing it. We use the GGI Scenario Database IIASA [3] as a point of departure for deriving optimal technology portfolios across different socioeconomic scenarios for a range of stabilization targets, focusing, in particular, on new, lowemission scenarios. More precisely, the dynamics underlying technology adoption and operational decisions are analyzed in a real options model, the output of which then informs the portfolio optimization. In this way, we determine the importance of different energy technologies in meeting specific stabilization targets under different circumstances (i.e., under different socioeconomic scenarios), providing valuable insight to policymakers about the incentive mechanisms needed to achieve robust long-term climate risk mitigation.

Impacts of the Fairly Priced REDD-based CO2 Offset Options on the Electricity Producers and Consumers

“…We choose technologies based on coal and gas (which generate CO 2 emissions) in order to provide an incentive for the producer to hedge against uncertain CO 2 prices [16]. In our example the regional electricity producer has power plants with the following technologies: coal (pulverized coal steam), combustion turbine (natural-gas-совремеННый иНструмеНтарий...…”

“…(9)). These values are calculated according to the algorithm described in the Section 2.1 with modifications in step 1 which should take into account the procedure of cost minimization with REDD options (16). In the Table 3 one can find formulas for the corresponding expected values which are used in the model with uncertainty.…”

Climate-aware decision-making: lessons for electric grid infrastructure planning and operations

“…Planning in the electricity sector is heavily influenced by decisions that have already been made; for example, existing investments will impact where new investments will need to go. Recognizing the importance of long planning timescales with multiple decision points, researchers have made use of multistage modeling tools to create the foundation for evaluating system conditions and resolving uncertainties over time (Szolgayová et al 2012, Ji et al 2017, 2020a, Peter 2019. For example, models may be run once to a selected point in time, then evaluated again based on new information about how conditions have evolved (Chattopadhyay et al 2016).…”

“…We encountered relatively few papers that explicitly consider multi-stakeholder engagement. In some cases, authors consider assumptions about risk tolerance or other decision-maker preferences (Szolgayová et al 2012, Ji et al 2017, 2020a, or formulate solutions to be decision-relevant (Burillo et Other authors have considered stakeholder involvement theoretically, such as by developing frameworks for engagement (Araújo and Shropshire 2021), simulating preferences via agent-based models (Hoekstra et al 2017, Teixeira et al 2018, Hanna and Gross 2021, or evaluating computational approaches capable of accounting for various perspectives by solving for multiple objectives and/or including appropriate uncertainty ranges on parameters (Heinrich et al 2007). Authors have also proposed that stakeholder engagement can be used to determine where to focus within a solution space once a set of solutions are obtained, and, as each individual view is necessarily a simplification of all considerations, to provide a check on other perspectives by helping ensure that a planning exercise accounts for needed nuances (Bollinger et al 2014, Nierop 2014.…”