© 2009

Distorted Time Preferences and Structural Change in the Energy Industry

A Theoretical and Applied Environmental-Economic Analysis


Part of the Sustainability and Innovation book series (SUSTAINABILITY)

About this book


This study contributes to the economic discounting debate by examining the welfare and policy implications of distorted time preferences for private investments. The analysis is applied to the energy industry, where it is of particular importance. In the transition to low-carbon energy generation, distorted time preferences are shown to induce a further distortion, in addition to that from the emission externality. Its extent varies directly with the time lag in capital accumulation. In order to implement the socially optimal path, environmental policy needs to be complemented by technology policy. The theoretical findings are applied to the upcoming structural change in the German electricity industry in the 2010s.


Distorted Time Peferences Energy Industry Environmental Policy Environmental and Technology Policy Technological Change Time-to-build technology policy

Authors and affiliations

  1. 1.Center for Energy and Environmental Markets (CEEM) School of Economics Australian School of BusinessUniversity of New South WalesSydneyAustralia

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