TH`ESE Docteur de l'Université Paris-Dauphine Morgan HERVÉ ...

Introduction
”However good our futures research may be, we shall never be
able to escape from the ultimate dilemma that all our knowledge
is about the past, and all our decisions are about the future.”
Ian Wilson (1975)
Presentation to the American Association
for the Advancement of Science.
The quotation by Wilson about the general decision-making process particularly
illustrates the difficulties of the investment decision-making process.
Climate change represents an unprecedented challenge to all public and private
decision-makers. However well we manage to forecast climate change
impacts, by elaborating more detailed climate models, or the effects of climate
policies, by improving our forecasting success, any forward-looking
decision-making will ultimately rely on past information. The only way
out is to acknowledge and embrace uncertainty in the investment decisionmaking.
This PhD thesis explores the effects a major climate policy, the
European Union Emissions Trading Scheme (EU ETS), has had and can
have on investment decision-making.
The latest bodywork of the Intergovernmental Panel on Climate Change
(IPCC) indicates that climate change has already started and the case for
its anthropogenic origin is now strongly backed by the scientific community.
The adoption in 1997 of the Kyoto Protocol, an international agreement aiming
at fighting global warming, marks a milestone in policy-led mitigation
efforts. The European Union is currently at the forefront of climate change
mitigation policies. The EU, as a group, is among the largest emitters.
In order to meet the Kyoto emissions reduction objectives of EU Member
states, the individual countries created an EU-wide trading bubble and allocated
a large part of their objectives to a cap-and-trade policy starting
2005: the European Union Emissions Trading Scheme (EU ETS). This EU
flagship climate policy constrains some 12,000 carbon-emitting installations.
The objective of such a policy is to foster cost-effective carbon emissions reductions
among those installations.
In this dissertation, we propose an assessment of the impact the EU ETS
has had on investments undertaken in the European power sector. The EU
ETS is a multi-sector policy covering both the power & heat sector and
industrial sectors (steel, cement, refining, etc.). We focus solely on European
power generators mitigation investments because of the higher burden
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