Transition from coal to natural gas power plants under CO2 consideration: a real options approach Online publication date: Thu, 07-Jan-2021
by Chung-Hsiao Wang; K. Jo Min
International Journal of Sustainable Economy (IJSE), Vol. 12, No. 4, 2020
Abstract: As a way to alleviate global warming, there have been major initiatives to reduce carbon dioxide (CO2) emission amount across the world. In Western Europe as well as in California, market-based permits for CO2 emission have been a major enabler of such initiatives. In this paper, under the assumption of such market-based permits where permit price is inherently uncertain, we model and analyse a transition process from coal-based to natural gas-based power plants with less CO2 emission based on a real options approach. Specifically, we apply existing real options approach to derive closed-form analytical solutions for such a transition. Subsequent managerial insights and policy implications are provided in the context of CO2 emission reduction and environmental ramifications.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Sustainable Economy (IJSE):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com