1. The impacts of uncertainties on the carbon mitigation design: Perspective from abatement cost and emission rate.
- Author
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Guo, Jian-Xin, Tan, Xianchun, Gu, Baihe, and Qu, Xinglong
- Subjects
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POLLUTION control costs , *STOCHASTIC programming , *DYNAMIC programming , *UNCERTAINTY , *EXPECTED returns - Abstract
In this paper, we use a stochastic dynamic programming model to evaluate the impacts of uncertainties on the abatement planning process. By involving the endogenous emission path, we differentiate two types of uncertainties during the planning process, which come from the volatility of the abatement cost and the ambiguity of emission rate. Results suggest that the considered uncertainties influence the decision-making process in several aspects by shaping the abatement path as well as emission path. (1) The impacts vary with the expected value and the level of variance of the uncertainty effects. Uncertainties caused by abatement costs from 0.02 to 0.06 and emission factors from 0.01 to 0.03 increase the total abatement costs around 7% and 5% respectively. (2) Both of these uncertainties can generate precautionary abatement in short-term. Especially during the early stages, the abatement task will be increased by 1% around in each period due to the uncertainties. However such an action will be diminishing as the duration elapses. (3) Both of these uncertainties influence the long-term abatement performances, however, with different forms and mechanisms. With small volatility, the emission rate changes the priority sequence of abatement actions more substantially in the short-term than the emission rate does. (4) The combined uncertainties can behave in a compound way to improve the uncertainty performance in the model. The difference between the emission peaks of conservative and extreme cases is significant with the gap being about 5 million metric ton. These results have potentially important policy implications and can provide a rationale for abatement actions. • We use a stochastic dynamic programming model to evaluate the impacts of uncertainty on the abatement strategy. • We differentiate two types of uncertainties during the planning process. • For both types of the uncertainty precautionary abatement is required at early stage to hedge the future risk. • The level of synergy effect and the hedging effect between the uncertainties depends on how they are combined. [ABSTRACT FROM AUTHOR]
- Published
- 2019
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