Using Real Options Thinking to Value Investment Flexibility in Carbon Capture and Utilization Projects: A Review

Carbon capture and utilization (CCU) is one of the key technologies that may help to reduce industrial emissions. However, deployment CCU hampered by various barriers, including high levels technical, policy market uncertainty. The real options theory (ROT) provides a method account for these uncertainties introduce flexibility in investment decision allowing decisions be changed response evolution uncertainties. ROT already being applied frequently evaluation renewable energy or carbon storage (CCS) projects, e.g., addressing uncertainty price CO2. has only found few applications literature date. Therefore, this paper investigates specific types arise with CO2, identifies present projects discusses valuation techniques. Research gaps are identified recommendations made fill gaps. sequence shown, together projects. This review can support options-based evaluations allow