When to Invest in Carbon Capture and Storage Technology: A Mathematical Model

An ESRI Research Bulletin from Darragh Walsh, Kevin O’Sullivan (MACSI, University of Limerick), William Lee (MACSI, University of Limerick), Mel Devine (MACSI, University of Limerick)

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The goal of this paper is to determine the optimal time to invest in retrofitting a CCS unit onto an existing power plant in (i) a region subject to a (deterministically evolving) carbon tax, such as the carbon floor introduced in Great Britain (GB) in April 2013, and (ii) in a region where there is uncertainty in the price of ????2 emissions, such as in the rest of Europe subject to the (stochastically evolving) ETS permit price. We do this by finding the investment time that maximises the net present value (NPV) of the option to invest in CCS.

The Research Bulletin provides short summaries of work published by ESRI staff and overviews of thematic areas covered by ESRI programmes of research. Bulletin articles are designed to be easily accessible to a wide readership.

Source: envirocentre.ie

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