Climate policy uncertainty and investment risk : in support of the G8 plan of action Our climate is changing. This is certain. Less certain however is the timing and magnitude of climate change and the cost of transition to a low carbon world. Therefore many policies and programmes are still at a formative stage and policy uncertainty is very high. This book identifies how climate change policy uncertainty may affect investment behaviour in the power sector. For power companies where capital stock is intensive and long lived those risks rank among the biggest and can create an incentive to delay investment. Our analysis results show that the risk premiums of climate change uncertainty can add 40% of construction costs of the plant for power investors and 10% of price surcharges for the electricity end users.