Using Ex Post Data to Estimate the Hurdle Rate of Abatement Investments – An Application to the Swedish Pulp and Paper Industry and Energy Sector
Fiche du document
2007
- handle: 10670/1.tt8yh4
- halshs: halshs-00272041
info:eu-repo/semantics/OpenAccess
Mots-clés
option value fuel price uncertainty carbon emissions abatement price uncertainty panel dataSujets proches
Energy resources Power supply Energy Energy Paper making and trade Papermaking industry Conservation of energy Correlation of forces EnergyCiter ce document
Katrin Millock et al., « Using Ex Post Data to Estimate the Hurdle Rate of Abatement Investments – An Application to the Swedish Pulp and Paper Industry and Energy Sector », HAL-SHS : économie et finance, ID : 10670/1.tt8yh4
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Résumé
We propose a method for estimating hurdlerates for firms' investments in pollution abatement technology, using expost data. The method is based on a structural option value model where thefuture price of polluting fuel is the major source of uncertainty facing thefirm. The econometric procedure is illustrated using a panel of firms fromthe Swedish pulp and paper industry, and the energy and heating sector from2000 to 2003. The results indicate a hurdle rate of investment of almost 3in the pulp and paper industry and almost 4 in the energy and heating sector.