Policy Should Incorporate the Cost of Error and Uncertainty in Estimates of Fuel Carbon Intensity

Goldman School of Public Policy Working Paper No. GSPP10-007

6 Pages Posted: 30 Sep 2010

See all articles by Michael O'Hare

Michael O'Hare

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Richard J. Plevin

University of California, Davis - Institute of Transportation Studies

Derek Lemoine

University of Arizona - Department of Economics

Date Written: September 17, 2010

Abstract

Implementation of many policies intended to reduce fuels’ contribution to global warming require an estimate of the global warming intensity (GWI) of various fuels. Determining the climate effect of a direct substitution of fuels is not the same as determining the official value of each fuel’s GWI used to implement the policy. Choosing the second, which depends in part on estimates of the first and their intrinsic uncertainty, is a decision that should reflect the shape of the probability distribution of the first and of the cost of error (the difference between the chosen value and the ‘real’ value. Decision analysis helps clarify the difference between these GWI’s, how they relate to each other, and how standard engineering practice like a safety factor applies to the regulator’s decision.

Suggested Citation

O'Hare, Michael and Plevin, Richard J. and Lemoine, Derek, Policy Should Incorporate the Cost of Error and Uncertainty in Estimates of Fuel Carbon Intensity (September 17, 2010). Goldman School of Public Policy Working Paper No. GSPP10-007. Available at SSRN: https://ssrn.com/abstract=1685328 or http://dx.doi.org/10.2139/ssrn.1685328

Michael O'Hare (Contact Author)

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Richard J. Plevin

University of California, Davis - Institute of Transportation Studies ( email )

One Shields Ave
davis, CA 95616
United States

HOME PAGE: http://www.plevin.com

Derek Lemoine

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

HOME PAGE: http://www.dereklemoine.com/

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