Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis

Large 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...

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Main Authors:	Strand, Jon, Miller, Sebastian
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABATEMENT POLICIES ALTERNATIVE ENERGY ALTERNATIVE ENERGY TECHNOLOGIES APPROACH ATMOSPHERE AVAILABILITY BALANCE CALCULATION CAPITAL COST CAPS CARBON CARBON CAPTURE CARBON DIOXIDE CARBON DIOXIDE EMISSIONS CARBON EMISSIONS CENTRAL CITIES CLIMATE CLIMATE CHANGE CLIMATE POLICY CO CO2 CONSUMPTION OF FOSSIL COST-BENEFIT COSTS OF EMISSIONS DEW DISCOUNT RATE DISCOUNT RATES DISTRIBUTION OF ENERGY DRIVERS ECONOMIC ANALYSIS EMISSION EMISSION ABATEMENT EMISSIONS CONTROL EMISSIONS INTENSITY EMISSIONS PRICES EMISSIONS TAXES ENERGY CONSUMPTION ENERGY COSTS ENERGY DEMAND ENERGY ECONOMICS ENERGY EFFICIENCY ENERGY EXPENDITURE ENERGY EXPENDITURES ENERGY INTENSIVE ENERGY POLICIES ENERGY POLICY ENERGY PRICE ENERGY PRICES ENERGY PRODUCTION COSTS ENERGY REQUIREMENT ENERGY SOURCES ENERGY SUPPLY ENERGY TAXES ENERGY TECHNOLOGY ENERGY USE ENVIRONMENTAL COSTS ENVIRONMENTAL ECONOMICS EXTERNALITIES FOSSIL FOSSIL ENERGY FOSSIL ENERGY USE FOSSIL FUEL FOSSIL FUELS FUEL FUEL CONSUMPTION FUEL COSTS FUEL EXTRACTION FUEL MARKET FUTURE PRICES GHG GHGS GREENHOUSE GREENHOUSE GASES HIGH ENERGY HIGH ENERGY INTENSITY INCOME INFRASTRUCTURE COST INFRASTRUCTURE COSTS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES LOW-CARBON MARGINAL UTILITY MARKET FAILURE POPULATION DENSITY PP PUBLIC TRANSPORT RENEWABLE ENERGIES RENEWABLE ENERGY RENEWABLE ENERGY PRODUCTION RESOURCE ECONOMICS RETROFIT OPTION RETROFITTING RISK AVERSION SCENARIOS STOCHASTIC PROCESS SUBSTITUTION SUBURBS SUPPLY COSTS TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SYSTEM TRANSPORT SYSTEMS TRANSPORTATION TRANSPORTATION COSTS TRUE UTILITY FUNCTION WEALTH ZERO EMISSIONS
Online Access:	http://documents.worldbank.org/curated/en/2010/02/11795686/climate-cost-uncertainty-retrofit-cost-uncertainty-infrastructure-closedown-framework-analysis http://hdl.handle.net/10986/19921

id	okr-10986-19921
recordtype	oai_dc
spelling	okr-10986-199212021-04-23T14:03:52Z Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis Strand, Jon Miller, Sebastian ABATEMENT POLICIES ALTERNATIVE ENERGY ALTERNATIVE ENERGY TECHNOLOGIES APPROACH ATMOSPHERE AVAILABILITY BALANCE CALCULATION CAPITAL COST CAPS CARBON CARBON CAPTURE CARBON DIOXIDE CARBON DIOXIDE EMISSIONS CARBON EMISSIONS CENTRAL CITIES CLIMATE CLIMATE CHANGE CLIMATE POLICY CO CO2 CONSUMPTION OF FOSSIL COST-BENEFIT COSTS OF EMISSIONS DEW DISCOUNT RATE DISCOUNT RATES DISTRIBUTION OF ENERGY DRIVERS ECONOMIC ANALYSIS EMISSION EMISSION ABATEMENT EMISSIONS CONTROL EMISSIONS INTENSITY EMISSIONS PRICES EMISSIONS TAXES ENERGY CONSUMPTION ENERGY COSTS ENERGY DEMAND ENERGY ECONOMICS ENERGY EFFICIENCY ENERGY EXPENDITURE ENERGY EXPENDITURES ENERGY INTENSIVE ENERGY POLICIES ENERGY POLICY ENERGY PRICE ENERGY PRICES ENERGY PRODUCTION COSTS ENERGY REQUIREMENT ENERGY SOURCES ENERGY SUPPLY ENERGY TAXES ENERGY TECHNOLOGY ENERGY USE ENVIRONMENTAL COSTS ENVIRONMENTAL ECONOMICS EXTERNALITIES FOSSIL FOSSIL ENERGY FOSSIL ENERGY USE FOSSIL FUEL FOSSIL FUELS FUEL FUEL CONSUMPTION FUEL COSTS FUEL EXTRACTION FUEL MARKET FUTURE PRICES GHG GHGS GREENHOUSE GREENHOUSE GASES HIGH ENERGY HIGH ENERGY INTENSITY INCOME INFRASTRUCTURE COST INFRASTRUCTURE COSTS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES LOW-CARBON MARGINAL UTILITY MARKET FAILURE POPULATION DENSITY PP PUBLIC TRANSPORT RENEWABLE ENERGIES RENEWABLE ENERGY RENEWABLE ENERGY PRODUCTION RESOURCE ECONOMICS RETROFIT OPTION RETROFITTING RISK AVERSION SCENARIOS STOCHASTIC PROCESS SUBSTITUTION SUBURBS SUPPLY COSTS TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SYSTEM TRANSPORT SYSTEMS TRANSPORTATION TRANSPORTATION COSTS TRUE UTILITY FUNCTION WEALTH ZERO EMISSIONS Large 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. 2014-09-02T18:32:12Z 2014-09-02T18:32:12Z 2010-02 http://documents.worldbank.org/curated/en/2010/02/11795686/climate-cost-uncertainty-retrofit-cost-uncertainty-infrastructure-closedown-framework-analysis http://hdl.handle.net/10986/19921 English en_US Policy Research Working Paper;No. 5208 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABATEMENT POLICIES ALTERNATIVE ENERGY ALTERNATIVE ENERGY TECHNOLOGIES APPROACH ATMOSPHERE AVAILABILITY BALANCE CALCULATION CAPITAL COST CAPS CARBON CARBON CAPTURE CARBON DIOXIDE CARBON DIOXIDE EMISSIONS CARBON EMISSIONS CENTRAL CITIES CLIMATE CLIMATE CHANGE CLIMATE POLICY CO CO2 CONSUMPTION OF FOSSIL COST-BENEFIT COSTS OF EMISSIONS DEW DISCOUNT RATE DISCOUNT RATES DISTRIBUTION OF ENERGY DRIVERS ECONOMIC ANALYSIS EMISSION EMISSION ABATEMENT EMISSIONS CONTROL EMISSIONS INTENSITY EMISSIONS PRICES EMISSIONS TAXES ENERGY CONSUMPTION ENERGY COSTS ENERGY DEMAND ENERGY ECONOMICS ENERGY EFFICIENCY ENERGY EXPENDITURE ENERGY EXPENDITURES ENERGY INTENSIVE ENERGY POLICIES ENERGY POLICY ENERGY PRICE ENERGY PRICES ENERGY PRODUCTION COSTS ENERGY REQUIREMENT ENERGY SOURCES ENERGY SUPPLY ENERGY TAXES ENERGY TECHNOLOGY ENERGY USE ENVIRONMENTAL COSTS ENVIRONMENTAL ECONOMICS EXTERNALITIES FOSSIL FOSSIL ENERGY FOSSIL ENERGY USE FOSSIL FUEL FOSSIL FUELS FUEL FUEL CONSUMPTION FUEL COSTS FUEL EXTRACTION FUEL MARKET FUTURE PRICES GHG GHGS GREENHOUSE GREENHOUSE GASES HIGH ENERGY HIGH ENERGY INTENSITY INCOME INFRASTRUCTURE COST INFRASTRUCTURE COSTS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES LOW-CARBON MARGINAL UTILITY MARKET FAILURE POPULATION DENSITY PP PUBLIC TRANSPORT RENEWABLE ENERGIES RENEWABLE ENERGY RENEWABLE ENERGY PRODUCTION RESOURCE ECONOMICS RETROFIT OPTION RETROFITTING RISK AVERSION SCENARIOS STOCHASTIC PROCESS SUBSTITUTION SUBURBS SUPPLY COSTS TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SYSTEM TRANSPORT SYSTEMS TRANSPORTATION TRANSPORTATION COSTS TRUE UTILITY FUNCTION WEALTH ZERO EMISSIONS
spellingShingle	ABATEMENT POLICIES ALTERNATIVE ENERGY ALTERNATIVE ENERGY TECHNOLOGIES APPROACH ATMOSPHERE AVAILABILITY BALANCE CALCULATION CAPITAL COST CAPS CARBON CARBON CAPTURE CARBON DIOXIDE CARBON DIOXIDE EMISSIONS CARBON EMISSIONS CENTRAL CITIES CLIMATE CLIMATE CHANGE CLIMATE POLICY CO CO2 CONSUMPTION OF FOSSIL COST-BENEFIT COSTS OF EMISSIONS DEW DISCOUNT RATE DISCOUNT RATES DISTRIBUTION OF ENERGY DRIVERS ECONOMIC ANALYSIS EMISSION EMISSION ABATEMENT EMISSIONS CONTROL EMISSIONS INTENSITY EMISSIONS PRICES EMISSIONS TAXES ENERGY CONSUMPTION ENERGY COSTS ENERGY DEMAND ENERGY ECONOMICS ENERGY EFFICIENCY ENERGY EXPENDITURE ENERGY EXPENDITURES ENERGY INTENSIVE ENERGY POLICIES ENERGY POLICY ENERGY PRICE ENERGY PRICES ENERGY PRODUCTION COSTS ENERGY REQUIREMENT ENERGY SOURCES ENERGY SUPPLY ENERGY TAXES ENERGY TECHNOLOGY ENERGY USE ENVIRONMENTAL COSTS ENVIRONMENTAL ECONOMICS EXTERNALITIES FOSSIL FOSSIL ENERGY FOSSIL ENERGY USE FOSSIL FUEL FOSSIL FUELS FUEL FUEL CONSUMPTION FUEL COSTS FUEL EXTRACTION FUEL MARKET FUTURE PRICES GHG GHGS GREENHOUSE GREENHOUSE GASES HIGH ENERGY HIGH ENERGY INTENSITY INCOME INFRASTRUCTURE COST INFRASTRUCTURE COSTS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES LOW-CARBON MARGINAL UTILITY MARKET FAILURE POPULATION DENSITY PP PUBLIC TRANSPORT RENEWABLE ENERGIES RENEWABLE ENERGY RENEWABLE ENERGY PRODUCTION RESOURCE ECONOMICS RETROFIT OPTION RETROFITTING RISK AVERSION SCENARIOS STOCHASTIC PROCESS SUBSTITUTION SUBURBS SUPPLY COSTS TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SYSTEM TRANSPORT SYSTEMS TRANSPORTATION TRANSPORTATION COSTS TRUE UTILITY FUNCTION WEALTH ZERO EMISSIONS Strand, Jon Miller, Sebastian Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
relation	Policy Research Working Paper;No. 5208
description	Large 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.
format	Publications & Research :: Policy Research Working Paper
author	Strand, Jon Miller, Sebastian
author_facet	Strand, Jon Miller, Sebastian
author_sort	Strand, Jon
title	Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
title_short	Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
title_full	Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
title_fullStr	Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
title_full_unstemmed	Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis
title_sort	climate cost uncertainty, retrofit cost uncertainty, and infrastructure closedown : a framework for analysis
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2010/02/11795686/climate-cost-uncertainty-retrofit-cost-uncertainty-infrastructure-closedown-framework-analysis http://hdl.handle.net/10986/19921
_version_	1764444057944195072

Climate Cost Uncertainty, Retrofit Cost Uncertainty, and Infrastructure Closedown : A Framework for Analysis

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