Discounting for Energy Transition Policies—Estimation of the Social Discount Rate for Poland

The transition of the energy system in Poland has a long time horizon and demands substantial investment effort supported by proper economic evaluation. It requires precise Social Discount Rate (SDR) estimation as discounting makes present value long-term effects extremely sensitive to discount rate level. However, Polish policymakers have little information on SDR: predominant practice applies priori fixed 5% rate, while studies devoted only are quite rare. To eliminate this research gap, our paper aims at estimating SDR for Poland, applicable policies. We derive three datasets varying length, twofold: using market rates via Consumption Interest (CRI) Opportunity Cost (SOC) capital, prescriptive Ramsey Gollier approaches based Welfare Function (SWF). results indicate that CRI SOC deviate substantially with changing data timeframes conditions, methods show much higher stability. Due planning horizons policies, we argue adopting, longest dataset’s Ramsey-based 4.72% which can be reduced 4.39% Gollier’s precautionary term (reflecting uncertainty over future consumption growth), main findings.