Societies around the world are facing high levels of uncertainty about energy and emissions and this creates unprecedented problems for investors.
The aim of our discussion paper is to help industry superannuation funds build the capacity to understand and deal with uncertainty in the context modernising the electricity sector. It is an attempt to provide a general overview of the issues and clear principled guidance on investment and policy. It is not intended to be another set of middle-of-the-road investment hints. In fact, one of the themes is that a good deal of mainstream thinking may be misleading.
We aim to assist industry superannuation fund thinking about decision making under uncertainty and how to assess the alternative technological options and costs. We also provide some key take-outs for investors.
We also attempt to outline some features of an optimal policy response. Some understanding of this is essential to help industry superannuation funds engage with government and for formulating long-run investment strategies.
Underpinning our analysis is the assertion that the best public policy outcomes come from laying down basic principles that help us think through the relative merits of alternative approaches.