In:
SPE Economics & Management, Society of Petroleum Engineers (SPE), Vol. 5, No. 02 ( 2013-05-2), p. 57-62
Kurzfassung:
Many socioeconomic rates of return for climate projects have been used in analyzing the present value of the climate benefit. However, little attention has been devoted to profitability assessments based on commercial considerations. The economic valuation of climate projects, seen from the perspective of a commercial company, is the subject of this article. In particular, we examine the required rate of return for a project in which the uncertainty in the carbon dioxide CO2) quota price is the main market uncertainty. We complement the existing climate literature by examining the required rate of return of a climate project in a Capital Asset Pricing Model (CAPM) setting. We find that the CO2 quota price has a slightly more systematic risk in the period calculated than that in the oil price, and we estimate the nominal required rate of return for the value of CO2 reduction to be 7.3 percentage points, which is similar to petroleum projects. Our findings may explain why it is difficult for oil companies to justify climate projects in their portfolios.
Materialart:
Online-Ressource
ISSN:
2150-1173
Sprache:
Englisch
Verlag:
Society of Petroleum Engineers (SPE)
Publikationsdatum:
2013
ZDB Id:
2530958-4
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