Abstract
According to the current situation of domestic carbon dioxide (CO2) reduction and the abatement planning of power plants, the decision-making model for optimal CO2 abatement investment in power plants has been built concerning uncertainties on CO2 policies and investment return rate. Under the framework, a case study on power plant was introduced. It is found that (i) higher permits price may stimulate power plants to increase abatement investment under certain return rate, (ii) whether power plants choose to invest more or not depends on the value of returns at fixed carbon price, and (iii) investment and its returns will change in the same directions with the investment return rate. It is suggested that for the mitigation goals to be met in a more efficient way, more stringent CO2 control measures and policies to lower investment costs should be taken into account.
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