Strand, Jon2012-03-192012-03-192010-05-01https://hdl.handle.net/10986/3781This paper uses some simple conceptual models to draw out various implications of infrastructure investments with long lifetimes for the ability of societies to reduce their future greenhouse gas emissions. A broad range of such investments, related both to energy supply and demand systems, may commit societies to high and persistent levels of greenhouse gas emissions over time, that are difficult and costly to change once the investments have been sunk. There are, the author argues, several strong reasons to expect the greenhouse gas emissions embedded in such investments to be excessive. One is that infrastructure investment decisions tend to be made on the basis of (current and expected future) emissions prices that do not fully reflect the social costs of greenhouse gas emissions resulting from the investments. A second, related, set of reasons are excessive discounting of future project costs and benefits including future climate damages, and a too-short planning horizon for infrastructure investors. These issues are illustrated for two alternative cases of climate damages, namely with the possibility of a "climate catastrophe," and with a sustained increase in the marginal global damage cost of greenhouse gas emissions.CC BY 3.0 IGOABATEMENTAGGREGATE DEMANDAPPROACHATMOSPHEREATMOSPHERIC CONCENTRATIONSAVAILABILITYBALANCECALCULATIONCAPITAL GAINSCARBONCARBON CAPTURECARBON CONCENTRATIONSCARBON ECONOMYCARBON EMISSIONSCARBON TAXESCLCLIMATECLIMATE CATASTROPHECLIMATE CATASTROPHESCLIMATE CHANGECLIMATE CHANGE MITIGATIONCLIMATE CHANGE SCIENCE PROGRAMCLIMATE DAMAGECLIMATE DAMAGESCLIMATE EFFECTSCLIMATE POLICYCO2COALCONSTANT EMISSIONSCOOLING SYSTEMSCOSTS OF EMISSIONSCUMULATIVE EMISSIONSDISCOUNT FACTORDISCOUNT RATEDISCOUNT RATESDISTRIBUTION SYSTEMSDOMESTIC PETROLEUMECONOMIC THEORYECONOMICS OF CLIMATE CHANGEELASTICITIESELASTICITYELASTICITY OF SUBSTITUTIONELECTRICITYELECTRICITY GENERATIONEMISSIONEMISSION LEVELSEMISSIONSEMISSIONS INTENSITIESEMISSIONS PRICESEMISSIONS TAXESENERGY CONSUMPTIONENERGY COSTSENERGY DEMANDENERGY ECONOMICSENERGY GOODSENERGY INPUTENERGY INTENSITYENERGY INTENSIVEENERGY PRICEENERGY PRICESENERGY PRODUCTIONENERGY PRODUCTION FACILITIESENERGY REQUIREMENTENERGY SUBSIDIESENERGY SUPPLYENERGY TECHNOLOGIESENERGY TECHNOLOGYENERGY USEFEASIBILITYFOSSILFOSSIL ENERGYFOSSIL ENERGY REQUIREMENTFOSSIL FUELFOSSIL FUEL CONSUMPTIONFOSSIL FUELSFUELFUEL DEMANDFUEL PRICEFUEL PRICE INCREASESFUEL PRICESGHGGLOBAL EMISSIONSGREENHOUSEGREENHOUSE GASGREENHOUSE GAS EMISSIONSHIGH ENERGYHIGHWAYHIGHWAY SYSTEMINCOMEINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINTEREST RATEINTERNATIONAL FINANCIAL INSTITUTIONSINVESTMENT DECISIONSLOW-CARBONMARGINAL COSTMONETARY FUNDMOTOR VEHICLESPETROLEUM PRICEPOWERPOWER PLANTPOWER PLANTSPRICE CHANGEPRICE CHANGESPRICE INCREASEPRIVATE TRANSPORTPROBABILITY DISTRIBUTIONPURE ENERGYRENEWABLE SOURCESRETROFIT OPTIONRETROFITTINGRISK AVERSIONROADSCENARIOSSTOCHASTIC PROCESSSUBSTITUTIONTRANSPORTTRANSPORT SERVICESTRUEUTILITIESUTILITY FUNCTIONUTILITY FUNCTIONSVALUE OF ENERGYVEHICLEVEHICLE TYPESVEHICLESWorld Bank10.1596/1813-9450-5295