The impact of uncertainty on optimal emission policies
- 1Potsdam Institute for Climate Impact Research, Telegraphenberg A31, 14473 Potsdam, Germany
- 2Chalmers University of Technology, Computer Science and Engineering, 412 96 Göteborg, Sweden
- 3University of Oxford, Dept. for Continuing Education, Ewert House, Ewert Place, OX2 7DD, UK
Abstract. We apply a computational framework for specifying and solving sequential decision problems to study the impact of three kinds of uncertainties on optimal emission policies in a stylized sequential emission problem.We find that uncertainties about the implementability of decisions on emission reductions (or increases) have a greater impact on optimal policies than uncertainties about the availability of effective emission reduction technologies and uncertainties about the implications of trespassing critical cumulated emission thresholds. The results show that uncertainties about the implementability of decisions on emission reductions (or increases) call for more precautionary policies. In other words, delaying emission reductions to the point in time when effective technologies will become available is suboptimal when these uncertainties are accounted for rigorously. By contrast, uncertainties about the implications of exceeding critical cumulated emission thresholds tend to make early emission reductions less rewarding.