Using Real Options to include uncertainty in the costing of ocean-based carbon dioxide removal technologies
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Using Real Options to include uncertainty in the costing of ocean-based carbon dioxide removal technologies
Fri, 24/04/2026 - 12:00 to 13:00
Location:
Speaker:
Prof. Pedro Linares
Affiliation:
Comillas Pontifical University, Spain
Synopsis:
Typically, the cost of carbon mitigation technologies has been estimated by computing all the necessary costs of the technology and then dividing it by the carbon mitigation potential. Then this cost is compared across technologies (for example, with Marginal Abatement Cost Curves) to inform decision-makers about which technologies are more interesting. That cost is also used to understand which technologies would be profitable under different carbon pricing schemes. However, when there is uncertainty about any of the parameters (such as the evolution of the costs of the technology, or the mitigation potential, or even the carbon price) then all the system becomes invalid. In this talk I will introduce alternatives to address these uncertainties, focusing in particular on Real Options theory, and will show some applications to the field.
Biography:
Pedro Linares is a Professor of Industrial Engineering of the ICAI School of Engineering, Director of the BP Chair on Energy and Sustainability, and co-founder and Director of Economics for Energy. He is also a researcher at the Institute for Technology Research (IIT), Affiliate Researcher at the MIT Center for Energy and Environmental Policy Research and the Energy Policy Research Group at the University of Cambridge, and Senior Fellow at EsadeEcPol – Center for Economic Policy. Currently he also serves as Director of the International Doctoral School of Comillas Pontifical University and as the Editor in Chief of The Energy Journal.