Miller, SebastianStrand, Jon2014-09-022014-09-022010-02https://hdl.handle.net/10986/19921Large and energy-intensive infrastructure investments with long life times have substantial implications for climate policy. This study focuses on options to scale down energy consumption and carbon emissions now and in the future, and on the costs of doing so. Two ways carbon emissions can be reduced post-investment include retrofitting the infrastructure, or closing it down. Generally, the presence of bulky infrastructure investments makes it more costly to reduce emissions later. Moreover, when expected energy and environmental costs are continually rising, inherent biases in the selection processes for infrastructure investments lead to excessive energy intensity in such investments. Thus great care must be taken when choosing the energy intensity of the infrastructure at the time of investment. Simulations indicate that optimally exercising the retrofit option, when it is available, reduces ex ante expected energy consumption relative to the no-option case. Total energy plus retrofit costs can also be substantially reduced, the more so the larger is ex ante cost uncertainty. However, the availability of the retrofit option also leads to a more energy intensive initial infrastructure choice; this offsets some, but usually not all, of the gains from options for subsequent retrofitting.en-USCC BY 3.0 IGOABATEMENT POLICIESALTERNATIVE ENERGYALTERNATIVE ENERGY TECHNOLOGIESAPPROACHATMOSPHEREAVAILABILITYBALANCECALCULATIONCAPITAL COSTCAPSCARBONCARBON CAPTURECARBON DIOXIDECARBON DIOXIDE EMISSIONSCARBON EMISSIONSCENTRAL CITIESCLIMATECLIMATE CHANGECLIMATE POLICYCOCO2CONSUMPTION OF FOSSILCOST-BENEFITCOSTS OF EMISSIONSDEWDISCOUNT RATEDISCOUNT RATESDISTRIBUTION OF ENERGYDRIVERSECONOMIC ANALYSISEMISSIONEMISSION ABATEMENTEMISSIONS CONTROLEMISSIONS INTENSITYEMISSIONS PRICESEMISSIONS TAXESENERGY CONSUMPTIONENERGY COSTSENERGY DEMANDENERGY ECONOMICSENERGY EFFICIENCYENERGY EXPENDITUREENERGY EXPENDITURESENERGY INTENSIVEENERGY POLICIESENERGY POLICYENERGY PRICEENERGY PRICESENERGY PRODUCTION COSTSENERGY REQUIREMENTENERGY SOURCESENERGY SUPPLYENERGY TAXESENERGY TECHNOLOGYENERGY USEENVIRONMENTAL COSTSENVIRONMENTAL ECONOMICSEXTERNALITIESFOSSILFOSSIL ENERGYFOSSIL ENERGY USEFOSSIL FUELFOSSIL FUELSFUELFUEL CONSUMPTIONFUEL COSTSFUEL EXTRACTIONFUEL MARKETFUTURE PRICESGHGGHGSGREENHOUSEGREENHOUSE GASESHIGH ENERGYHIGH ENERGY INTENSITYINCOMEINFRASTRUCTURE COSTINFRASTRUCTURE COSTSINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINFRASTRUCTURE PROJECTSINFRASTRUCTURESLOW-CARBONMARGINAL UTILITYMARKET FAILUREPOPULATION DENSITYPPPUBLIC TRANSPORTRENEWABLE ENERGIESRENEWABLE ENERGYRENEWABLE ENERGY PRODUCTIONRESOURCE ECONOMICSRETROFIT OPTIONRETROFITTINGRISK AVERSIONSCENARIOSSTOCHASTIC PROCESSSUBSTITUTIONSUBURBSSUPPLY COSTSTOTAL COSTTOTAL COSTSTRANSPORTTRANSPORT SYSTEMTRANSPORT SYSTEMSTRANSPORTATIONTRANSPORTATION COSTSTRUEUTILITY FUNCTIONWEALTHZERO EMISSIONS10.1596/1813-9450-5208