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Critical mid-term uncertainties in long-term decarbonisation pathways

Usher, W; Strachan, N; (2012) Critical mid-term uncertainties in long-term decarbonisation pathways. Energy Policy , 41 433 - 444. 10.1016/j.enpol.2011.11.004. Green open access

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Abstract

Over the next decade, large energy investments are required in the UK to meet growing energy service demands and legally binding emission targets under a pioneering policy agenda. These are necessary despite deep mid-term (2025–2030) uncertainties over which national policy makers have little control. We investigate the effect of two critical mid-term uncertainties on optimal near-term investment decisions using a two-stage stochastic energy system model. The results show that where future fossil fuel prices are uncertain: (i) the near term hedging strategy to 2030 differs from any one deterministic fuel price scenario and is structurally dissimilar to a simple ‘average’ of the deterministic scenarios, and (ii) multiple recourse strategies from 2030 are perturbed by path dependencies caused by hedging investments. Evaluating the uncertainty under a decarbonisation agenda shows that fossil fuel price uncertainty is very expensive at around £20 billion. The addition of novel mitigation options reduces the value of fossil fuel price uncertainty to £11 billion. Uncertain biomass import availability shows a much lower value of uncertainty at £300 million. This paper reveals the complex relationship between the flexibility of the energy system and mitigating the costs of uncertainty due to the path-dependencies caused by the long-life times of both infrastructures and generation technologies.

Type: Article
Title: Critical mid-term uncertainties in long-term decarbonisation pathways
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.enpol.2011.11.004
Publisher version: http://dx.doi.org/10.1016/j.enpol.2011.11.004
Language: English
Additional information: This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Keywords: Energy system modelling, Uncertainty, Stochastic programming
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources
URI: https://discovery.ucl.ac.uk/id/eprint/1340721
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