Real option based appraisal of environmental investments : an assessment of NOx emission control techniques in large combustion plants

The thesis at hand provides a real option based decision support model for politically enforced environmental investments, which do not gain company internal economic profit. Therefore, a detailed methodology for the estimation of investments and operating costs for the exemplary application of NOX emission control techniques in fossil-fueled large combustion plants is developed. This methodology focusses on the predominantly used secondary abatement techniques SCR (selective catalytic reduction) and SNCR (selective non-catalytic reduction). The results thereof serve as input values for a Monte-Carlo based real option model that investigates the influence of different policy instruments on the optimal timing of the investment. In focus are those policy instruments that provide an economic incentive for early investments such as investment funding schemes or emission fees.