Seminar: Uncertain Climate Policy and Investment Timing: Evidence from Hydropower Plants

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Kristin Linnerud (CICERO)

Discussant: Gijsbert Zwart (CPB)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject Investors in green technologies follow the climate policy debate closely as part of forming their expectations regarding project viability. Based on panel data of 214 licenses to construct hydropower plants, we examine whether uncertainty with respect to the introduction of a market for green certificates affected the timing of investments in Norway from 2001 to 2010. We find that (1) traditional utilities and other professional investors in the energy market act in accordance with a real options investment rule, and the uncertain policy decision delayed their investment decision; and (2) farmers without previous experience in energy investment act in accordance with a net present value investment rule, focusing on the value of the immediate investment.

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