Editors of Journal of Environmental &Earth Sciences: Prof. Jin Shuanggen and Dr. Guo Jianping Named 2024 Highly Cited Chinese Researchers
2025-03-27
Navigating Climate Change: A Framework for Renewable Energy Investments under Uncertainty
Authors
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Aida Nefzi
1. Department of Finance and Investment, College of Business Administration, University of Tabuk, Tabuk 47311, Saudi Arabia; 2. Quantitative Method and Management Department, Faculty of Economics and Management of Sousse, University of Sousse, Tunis 4000, Tunisia
DOI:
https://doi.org/10.30564/jees.v7i5.8592Abstract
This study contributes to renewable energy policy modeling by developing a dynamic decision-making framework that incorporates uncertainty, irreversibility, and the value of information. It responds to the growing need for structured tools to guide investments amid climate volatility, technological change, and economic risk. Grounded in decision theory—especially the work of Von Neumann, Morgenstern, and Savage—the framework models renewable energy investments using subjective probabilities and quasi-option value under evolving climate conditions. The empirical component focuses on ARAMCO’s renewable energy strategy, a corporate case illustrating how fossil-fuel-dependent entities can pivot toward sustainability. The analysis uses Net Present Value (NPV) modeling and real options analysis under different discount rates and carbon pricing scenarios to assess financial feasibility. Results show that lower discount rates and moderate carbon prices improve investment attractiveness, while high carbon pricing significantly reduces project viability. The study also highlights the policy relevance of this framework. Government subsidies, adaptive regulation, and public-private partnerships emerge as critical enablers of resilient investments. It further suggests that aligning ESG reporting standards with carbon pricing policies can strengthen market signals and encourage private capital flow into renewables.By integrating theoretical modeling with corporate investment realities, this chapter offers a replicable tool for policymakers and investors. Future research should expand its application across sectors and geographies to validate generalizability and improve planning in the transition toward low-carbon economies.
Keywords:
Renewable Energy Investment; Decision-Making under Uncertainty; Irreversibility; Climate Policy; QuasiOption Value; ESG Integration; ARAMCO Case Study; Sustainable FinanceReferences
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Nefzi, A. (2025). Navigating Climate Change: A Framework for Renewable Energy Investments under Uncertainty. Journal of Environmental & Earth Sciences, 7(5), 469–491. https://doi.org/10.30564/jees.v7i5.8592
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