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ID:
176776
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| Summary/Abstract |
This paper aims to explore the appropriate investment strategy for Chinese power enterprises with the effect of the nationwide carbon emissions trading (NCET) market. Based on the system dynamics (SD) theory and the analysis of investment strategies, the SD model for the investment analysis of power enterprises is proposed. The simulation experiments based on three different investment policy scenarios (i.e., conservative, neutral and active) are conducted. According to the simulation results, the reasonable short-term investment for enterprises should be increased. If enterprises choose to invest more resources in the installation of green powers (hydropower, wind power and photovoltaic), their carbon emissions and profits may be more difficult to achieve qualitative changes in the short term. It is suggested that before the establishment of NCET market, enterprises should give priority to investing in clean technology instead of large-scale green energy installation. In the long run, increasing the investment of green power generation will help enterprises resist the rising cost of carbon trading. In addition, even in the conservative policy environment, the enterprise can still achieve its carbon discharges peak value before 2030, so the government may consider adopting a loose policy standard to support the economic interests of power enterprises.
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| 2 |
ID:
176904
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| Summary/Abstract |
The soaring demand for natural gas and deteriorating environmental conditions in recent years have together created a significant incentive for China to develop shale gas exploration. In this endeavor, production capacity is a major uncertainty that substantially affects the net investment return. We propose a Markov decision process model to explore and determine the desirable investment strategy under such uncertainty. Our model has the advantage of being able to handle dynamic stochastic market states, and it considers not only the value of the project itself (net cash flow) but also the social welfare, environmental cost, and financial subsidy. Our objective is to maximize the long run expected return of investment. The methodology was applied to determine the investment strategy for a case study in China. We found that the project is feasible only when the production capacity is larger than 8.55 billion cubic meters. Additional shale gas supply may generate higher sales revenue. However, the benefits may be neutralized by the decrease in price when domestic demand is inelastic to price. We also found that financial subsidy is an effective incentive for shale gas investment because it significantly increases the expected return of investment.
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