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Infrastructure Investments under Uncertainty with the Possibility of Retrofit : Theory and Simulations

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dc.contributor.authorMiller, Sebastian
dc.contributor.authorStrand, Jon
dc.contributor.authorSiddiqui, Sauleh
dc.date.accessioned2012-03-19T17:59:32Z
dc.date.available2012-03-19T17:59:32Z
dc.date.issued2011-01-01
dc.description.abstractInvestments in large, long-lived, energy-intensive infrastructure investments using fossil fuels increase longer-term energy use and greenhouse gas emissions, unless the plant is shut down early or undergoes costly retrofit later. These investments will depend on expectations of retrofit costs and future energy costs, including energy cost increases from tighter controls on carbon emissions. Simulation analysis shows that the retrofit option can significantly reduce anticipated future energy consumption as of the time of initial investment, and total future energy plus retrofit costs. The more uncertain are the costs, the greater the value of this option. However, the future retrofit option also induces more energy-intensive infrastructure choices, partly offsetting the direct effect of having the option on anticipated energy use. Efficient, forward-looking infrastructure investments have high potential for reducing long-term energy consumption. Particularly if energy prices are expected to rise, however, the potential for reduced energy consumption will be eroded if expectations of energy prices do not include environmental costs or future retrofit possibilities and technologies are not adequately developed.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110103092025
dc.identifier.urihttps://hdl.handle.net/10986/3289
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5516
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectABATEMENT POLICIES
dc.subjectAPPROACH
dc.subjectATMOSPHERE
dc.subjectAVAILABILITY
dc.subjectBALANCE
dc.subjectCAPITAL COST
dc.subjectCARBON CAPTURE
dc.subjectCARBON DIOXIDE
dc.subjectCARBON DIOXIDE EMISSIONS
dc.subjectCARBON EMISSIONS
dc.subjectCARBON TAXES
dc.subjectCLIMATE
dc.subjectCLIMATE CHANGE
dc.subjectCLIMATE POLICY
dc.subjectCO2
dc.subjectCONSUMPTION OF FOSSIL
dc.subjectCOST OF CARBON
dc.subjectCOST-BENEFIT
dc.subjectDEMAND ELASTICITY
dc.subjectDEMAND FOR ENERGY
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEW
dc.subjectDISCOUNT RATE
dc.subjectDISCOUNT RATES
dc.subjectDISTRIBUTION OF ENERGY
dc.subjectECONOMIC ANALYSIS
dc.subjectELASTICITY OF DEMAND
dc.subjectEMISSION
dc.subjectEMISSION ABATEMENT
dc.subjectEMISSIONS CONTROL
dc.subjectEMISSIONS INTENSITY
dc.subjectEMISSIONS PRICES
dc.subjectENERGY CONSUMPTION
dc.subjectENERGY COST SAVINGS
dc.subjectENERGY COSTS
dc.subjectENERGY DEMAND
dc.subjectENERGY ECONOMICS
dc.subjectENERGY EFFICIENCY
dc.subjectENERGY EXPENDITURES
dc.subjectENERGY INTENSIVE
dc.subjectENERGY POLICIES
dc.subjectENERGY POLICY
dc.subjectENERGY PRICE
dc.subjectENERGY PRICES
dc.subjectENERGY REQUIREMENT
dc.subjectENERGY SOURCES
dc.subjectENERGY SUPPLY
dc.subjectENERGY TAXES
dc.subjectENERGY TECHNOLOGIES
dc.subjectENERGY TECHNOLOGY
dc.subjectENERGY USE
dc.subjectENVIRONMENTAL COSTS
dc.subjectENVIRONMENTAL ECONOMICS
dc.subjectFINANCIAL SUPPORT
dc.subjectFOSSIL
dc.subjectFOSSIL ENERGY
dc.subjectFOSSIL ENERGY USE
dc.subjectFOSSIL FUEL
dc.subjectFOSSIL FUELS
dc.subjectFUEL
dc.subjectFUEL CONSUMPTION
dc.subjectFUEL COSTS
dc.subjectFUTURE PRICES
dc.subjectGHG
dc.subjectGHGS
dc.subjectGREENHOUSE
dc.subjectGREENHOUSE GAS
dc.subjectGREENHOUSE GAS EMISSIONS
dc.subjectGREENHOUSE GAS MITIGATION
dc.subjectGREENHOUSE GASES
dc.subjectHIGH ENERGY INTENSITY
dc.subjectHIGHER ENERGY CONSUMPTION
dc.subjectINCOME
dc.subjectINFRASTRUCTURE INVESTMENT
dc.subjectLOW-CARBON
dc.subjectLOWER COSTS
dc.subjectLOWER PRICE
dc.subjectMARGINAL COST
dc.subjectMARGINAL UTILITY
dc.subjectMARKET FAILURE
dc.subjectPOLICY MAKERS
dc.subjectPP
dc.subjectPRICE ELASTICITY
dc.subjectPRICE ELASTICITY OF DEMAND
dc.subjectPRICE INCREASE
dc.subjectREDUCTION IN ENERGY CONSUMPTION
dc.subjectRENEWABLE ENERGY
dc.subjectRESOURCE ECONOMICS
dc.subjectRETROFIT OPTION
dc.subjectRETROFITTING
dc.subjectRISK AVERSION
dc.subjectSCENARIOS
dc.subjectSTOCHASTIC PROCESS
dc.subjectSUBSTITUTION
dc.subjectSUPPLY COSTS
dc.subjectSUSTAINABLE DEVELOPMENT
dc.subjectTOTAL COSTS
dc.subjectUTILITY FUNCTION
dc.subjectUTILITY FUNCTIONS
dc.subjectZERO EMISSIONS
dc.titleInfrastructure Investments under Uncertainty with the Possibility of Retrofit : Theory and Simulationsen
dspace.entity.typePublication
okr.date.disclosure2011-01-01
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110103092025
okr.globalpracticeEnergy and Extractives
okr.guid393331468333607245
okr.identifier.doi10.1596/1813-9450-5516
okr.identifier.externaldocumentum000158349_20110103092025
okr.identifier.internaldocumentum13309896
okr.identifier.reportWPS5516
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/01/03/000158349_20110103092025/Rendered/PDF/WPS5516.pdfen
okr.region.administrativeThe World Region
okr.region.administrativeThe World Region
okr.topicEnergy::Energy Production and Transportation
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublicationc9d5219c-9076-5386-b0d2-03bab820c61d
relation.isAuthorOfPublication.latestForDiscoveryc9d5219c-9076-5386-b0d2-03bab820c61d
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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