Stochastic cost-benefit analysis for the energy transition – Stoc-CBA

According to the latest IEA’s Sustainable Development Scenario, almost 35% of the cumulative emissions reductions by 2070 hinge on technologies that are currently at large prototype or demonstration phase, and around 40% on technologies that are not yet commercially deployed at a large scale. The energy trajectories are largely determined by how the cost and technical performances of competing technologies evolve through innovation but are also affected by changing policy priorities and consumer choices. Public authorities must allocate budget wisely and must consider the high levels of risk that energy transition entails. Hence, cost-benefit analysis must become the reference instrument for budgetary allocation and must better handle risks.