Montag, 11. Juli 2011

Financial valuation of investments

Financial valuation of investments in future power generation technologies: nuclear fusion and CCS in an emissions trading system

Heinz Eckart Klingelhöfer / Peter Kurz

Abstract: This paper outlines a model approach for the financial valuation of future power generation technologies, such as nuclear fusion or carbon capture and storage (CCS) under an emissions trading regime. Since on imperfect markets, interdependencies between decisions inhibit the isolated valuation of an investment, we use simultaneous calculation of optimal production, sales and investment programs; these are subject to the constraints and conditions characteristic for investments in low- and zero- carbon technologies such as fusion and CCS. Duality theory allows to derive, identify and economically interpret the determinants for the price ceiling as (corrected) net present values. Sensitivity analysis shows how changes in the technical specification or environmental policies affect the maximum payable price. Particularly, tradable permits have several effects on low – carbon investments and do not always encourage CO2 abatement. While a zero – emissions technology like fusion always profits from a tightened emissions trading scheme, for low – carbon technology like CCS – in particular cases – this may even be counterproductive from an economics as well as an environmental point of view.

(Central European Journal of Operations Research. DOI: 10.1007(s10100-011-0193-8)

Klingelhöfer, Prof. Dr. Heinz Eckart
R&I Professor für Managerial Accounting and Finance
Tshwane University of Technology
Faculty of Economics and Finance
Department of Managerial Accounting and Finance
Private Bag X680
Pretoria 0001
South Africa  externe Seite

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