Valuing climate change uncertainty reductions for robust energy portfolios

Climate policy uncertainty has decisive influence on energy sector strategies. Potential stranded climate-energy investments may be enormous. Remote sensing can improve our understanding of the climate system and thus better inform climate policy and reduce associated uncertainties. We develop an integrated energy-portfolio model to value these uncertainties. The operations of individual power plants are optimized using real options given scenarios of stochastically evolving CO2 prices mimicking observation-induced climate policy uncertainty. The resulting profit distributions are used in a portfolio optimization. The optimization under imperfect information about future CO2 prices leads to substantially lower profits for a given risk level when portfolios are to be robust across all plausible scenarios. A potential uncertainty reduction associated with an improved climate modeling supported by remote sensing will thus not only lead to substantial financial efficiency gains, but will also be conducive to steering investments into the direction of higher shares of renewable energy

An Integrated CVaR and Real Options Approach to Investments in the Energy Sector

The objective of this paper is to combine a real options framework with portfolio optimization techniques and to apply this new framework to investments in the electricity sector. In particular, a real options model is used to assess the adoption decision of particular technologies under uncertainty. These technologies are coal-fired power plants, biomass-fired power plants and onshore wind mills, and they are representative of technologies based on fossil fuels, biomass and renewables, respectively. The return distributions resulting from this analysis are then used as an input to a portfolio optimization, where the measure of risk is the Conditional Value-at-Risk (CVaR)

Generating crop calendars with Web search data

This paper demonstrates the potential of using Web search volumes for generating crop specific planting and harvesting dates in the USA integrating climatic, social and technological factors affecting crop calendars. Using Google Insights for Search, clear peaks in volume occur at times of planting and harvest at the national level, which were used to derive corn specific planting and harvesting dates at a weekly resolution. Disaggregated to state level, search volumes for corn planting generally are an agreement with planting dates from a global crop calendar dataset. However, harvest dates were less discriminatory at the state level, indicating that peaks in search volume may be blurred by broader searches on harvest as a time of cultural events. The timing of other agricultural activities such as purchase of seed and response to weed and pest infestation was also investigated. These results highlight the future potential of using Web search data to derive planting dates in countries where the data are sparse or unreliable, once sufficient search volumes are realized, as well as the potential for monitoring in real time the response of farmers to climate change over the coming decades. Other potential applications of search volume data of relevance to agronomy are also discussed

Affordable nutrient solutions for improved food security as evidenced by crop trials

The continuing depletion of nutrients from agricultural soils in Sub-Saharan African is accompanied by a lack of substantial progress in crop yield improvement. In this paper we investigate yield gaps for corn under two scenarios: a micro-dosing scenario with marginal increases in nitrogen (N) and phosphorus (P) of 10 kg ha/1 and a larger yet still conservative scenario with proposed N and P applications of 80 and 20 kg/ha respectively. The yield gaps are calculated from a database of historical FAO crop fertilizer trials at 1358 locations for Sub-Saharan Africa and South America. Our approach allows connecting experimental field scale data with continental policy recommendations. Two critical findings emerged from the analysis. The first is the degree to which P limits increases in corn yields. For example, under a micro-dosing scenario, in Africa, the addition of small amounts of N alone resulted in mean yield increases of 8% while the addition of only P increased mean yields by 26%, with implications for designing better balanced fertilizer distribution schemes. The second finding was the relatively large amount of yield increase possible for a small, yet affordable amount of fertilizer application. Using African and South American fertilizer prices we show that the level of investment needed to achieve these results is considerably less than 1% of Agricultural GDP for both a micro-dosing scenario and for the scenario involving higher yet still conservative fertilizer application rates. In the latter scenario realistic mean yield increases ranged between 28 to 85% in South America and 71 to 190% in Africa (mean plus one standard deviation). External investment in this low technology solution has the potential to kick start development and could complement other interventions such as better crop varieties and improved economic instruments to support farmers

Improved Methods and Metrics for Assessing Impacts, Vulnerability and Adaptation

Over the course of the MEDIATION project, Work Package 2 was tasked with "develop[ing] and apply[ing] a toolbox, defined as a set of models, methods, and metrics for the assessment of impacts and vulnerability and adaptation options." As highlighted in Deliverable 2.2, many frameworks and methods for assessing adaptation have been developed over the last 20 years, yet these often have not been adopted in the context of formal adaptation policies in Europe and elsewhere. Reasons and problems include: (i) a fragmentation of methods and tools, (ii) a lack of linkages to actual policy needs, (iii) a lack of understanding and communication of uncertainties, (iv) the often expert-based nature and complexity of methods used versus actual user demands, and (v) a lack of consistent data, definitions and metrics. Deliverable 2.2 put forward a rough prototype for a toolbox of methods for studying impacts, vulnerability, and adaptation. In this deliverable, we discuss subsequent work on the MEDIATION toolbox, and report on application and testing of the improved methods and metrics in selected key European sectors and regions. We present feedback and improvement to methods and metrics based on input from case studies, stakeholders, and focus groups, as well as an overview of case study work and contribution to an improved MEDIATION toolbox. This input resulted in a number of conclusions relating to the development and use of methods and metrics, reducing uncertainty in CCIAV, and led to a number of changes, including the creation of a novel typology for classifying methods and models relating to CCIAV analysis. We provide an overview of the new typology, as well as the final toolbox, and summarize case study contributions towards improved methods and metrics

Global Feedstock Scenarios for Bioenergy - Land-Use Change and Trade-Offs

This paper presents scenarios of global feedstock supply for the production of bioenergy under specified social and environmental safeguard provisions. In particular, concerns for the preservation of biodiversity and the reduction of deforestation are considered in different combinations of scenarios. The objectives of this study were 3-fold: (a) to achieve a global perspective using an integrated modeling approach; (b) to frame the boundaries for lower scale assessments; and (c) to identify potential trade-offs to be considered in future research. The aggregate results, achieved through the application of an integrated global modeling cluster, are in line with other studies predicting a doubling of global biomass supplies by mid-century. These supplies will to the largest extent be sourced from the conversion of unmanaged forest into managed forest, from new fast growing short rotation plantations and from intensification as well as optimization of land-use. Depending on the underlying scenario, it can be shown that zero net deforestation by 2020 can be reached and uphold while implying only a minor expansion into managed forests. Results further indicate that especially regions of the southern hemisphere i.e. the tropical belt will face controlled forest conversion from unmanaged to sustainably managed as well as increased protection of area for ecosystems services such as biodiversity. The study concludes with the recommendation of increased focus on targeted regional policy design and implementation following integrated global assessments

Climate change induced transformations of agricultural systems: insights from a global model

Climate change might impact crop yields considerably and anticipated transformations of agricultural systems are needed in the coming decades to sustain affordable food provision. However, decision-making on transformational shifts in agricultural systems is plagued by uncertainties concerning the nature and geography of climate change, its impacts, and adequate responses. Locking agricultural systems into inadequate transformations costly to adjust is a significant risk and this acts as an incentive to delay action. It is crucial to gain insight into how much transformation is required from agricultural systems, how robust such strategies are, and how we can defuse the associated challenge for decision-making. While implementing a definition related to large changes in resource use into a global impact assessment modelling framework, we find transformational adaptations to be required of agricultural systems in most regions by 2050s in order to cope with climate change. However, these transformations widely differ across climate change scenarios: uncertainties in large-scale development of irrigation span in all continents from 2030s on, and affect two-thirds of regions by 2050s. Meanwhile, significant but uncertain reduction of major agricultural areas affects the Northern Hemisphere's temperate latitudes, while increases to non-agricultural zones could be large but uncertain in one-third of regions. To help reducing the associated challenge for decision-making, we propose a methodology exploring which, when, where and why transformations could be required and uncertain, by means of scenario analysis

On the K^+D Interaction at Low Energies

The Kd reactions are considered in the impulse approximation with NN final-state interactions (NN FSI) taken into account. The realistic parameters for the KN phase shifts are used. The "quasi-elastic" energy region, in which the elementary KN interaction is predominantly elastic, is considered. The theoretical predictions are compared with the data on the K^+d->K^+pn, K^+d->K^0pp, K^+d->K^+d and K^+d total cross sections. The NN FSI effect in the reaction K^+d->K^+pn has been found to be large. The predictions for the Kd cross sections are also given for slow kaons, produced from phi(1020) decays, as the functions of the isoscalar KN scattering length a_0. These predictions can be used to extract the value of a_0 from the data.Comment: 22 pages, 5 figure