IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v19y2011i1p33-41.html
   My bibliography  Save this article

Refunding ETS proceeds to spur the diffusion of renewable energies: An analysis based on the dynamic oligopolistic electricity market model EMELIE

Author

Listed:
  • Traber, Thure
  • Kemfert, Claudia

Abstract

We use a quantitative electricity market model to analyze the welfare effects of refunding a share of the emission trading proceeds to support renewable energy technologies that are subject to experience effects. We compare effects of supporting renewable energies under both perfect and oligopolistic competition with competitive fringe firms and emission trading regimes that achieve 70 and 80% emission reductions by 2050. The results indicate the importance of market power for renewable energy support policy. Under imperfect competition welfare improvements is maximized by refunding 10% of the emission trading proceeds, while under perfect competition the optimal refunding share is only 5%. However, under both behavioral assumptions we find significant welfare improvements due to experience effects which are induced by the support for renewable energy.

Suggested Citation

  • Traber, Thure & Kemfert, Claudia, 2011. "Refunding ETS proceeds to spur the diffusion of renewable energies: An analysis based on the dynamic oligopolistic electricity market model EMELIE," Utilities Policy, Elsevier, vol. 19(1), pages 33-41, January.
    • Handle: RePEc:eee:juipol:v:19:y:2011:i:1:p:33-41
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0957-1787(10)00042-1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. James B. Bushnell & Erin T. Mansur & Celeste Saravia, 2008. "Vertical Arrangements, Market Structure, and Competition: An Analysis of Restructured US Electricity Markets," American Economic Review, American Economic Association, vol. 98(1), pages 237-266, March.
    2. Gersbach, Hans & Requate, Till, 2004. "Emission taxes and optimal refunding schemes," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 713-725, March.
    3. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    4. Parry, Ian W H & Pizer, William A & Fischer, Carolyn, 2003. "How Large Are the Welfare Gains from Technological Innovation Induced by Environmental Policies?," Journal of Regulatory Economics, Springer, vol. 23(3), pages 237-255, May.
    5. Uyterlinde, Martine A. & Junginger, Martin & de Vries, Hage J. & Faaij, Andre P.C. & Turkenburg, Wim C., 2007. "Implications of technological learning on the prospects for renewable energy technologies in Europe," Energy Policy, Elsevier, vol. 35(8), pages 4072-4087, August.
    6. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
    7. Rubin, Edward S. & Chen, Chao & Rao, Anand B., 2007. "Cost and performance of fossil fuel power plants with CO2 capture and storage," Energy Policy, Elsevier, vol. 35(9), pages 4444-4454, September.
    8. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
    10. Jos Sijm & Karsten Neuhoff & Yihsu Chen, 2006. "CO 2 cost pass-through and windfall profits in the power sector," Climate Policy, Taylor & Francis Journals, vol. 6(1), pages 49-72, January.
    11. Till Requate, 1993. "Pollution control in a Cournot duopoly via taxes or permits," Journal of Economics, Springer, vol. 58(3), pages 255-291, October.
    12. van der Zwaan, B. C. C. & Gerlagh, R. & G. & Klaassen & Schrattenholzer, L., 2002. "Endogenous technological change in climate change modelling," Energy Economics, Elsevier, vol. 24(1), pages 1-19, January.
    13. Thure Traber & Claudia Kemfert, 2009. "Impacts of the German Support for Renewable Energy on Electricity Prices, Emissions, and Firms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 155-178.
    14. Kverndokk, Snorre & Rosendahl, Knut Einar, 2007. "Climate policies and learning by doing: Impacts and timing of technology subsidies," Resource and Energy Economics, Elsevier, vol. 29(1), pages 58-82, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. A. Schröder & T. Traber & C. Kemfert, 2013. "Market Driven Power Plant Investment Perspectives In Europe: Climate Policy And Technology Scenarios Until 2050 In The Model Emelie-Esy," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 4(supp0), pages 1-22.
    2. Michael Pahle, Kai Lessmann, Ottmar Edenhofer, and Nico Bauer, 2013. "Investments in Imperfect Power Markets under Carbon Pricing: A Case Study Based Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aalbers, Rob & Shestalova, Victoria & Kocsis, Viktória, 2013. "Innovation policy for directing technical change in the power sector," Energy Policy, Elsevier, vol. 63(C), pages 1240-1250.
    2. Elizabeth Baldwin, Yongyang Cai, Karlygash Kuralbayeva, 2018. "To build or not to build? Capital stocks and climate policy," GRI Working Papers 290, Grantham Research Institute on Climate Change and the Environment.
    3. Oscar Afonso & Ana Catarina Afonso, 2015. "Endogenous Growth Effects of Environmental Policies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 607-629, December.
    4. Vogt-Schilb, Adrien & Meunier, Guy & Hallegatte, Stephane, 2012. "How inertia and limited potentials affect the timing of sectoral abatements in optimal climate policy," Policy Research Working Paper Series 6154, The World Bank.
    5. Dechezlepretre, Antoine & Martin, Ralf & Mohnen, Myra, 2014. "Knowledge spillovers from clean and dirty technologies," LSE Research Online Documents on Economics 60501, London School of Economics and Political Science, LSE Library.
    6. Joseph E. Aldy & Alan J. Krupnick & Richard G. Newell & Ian W. H. Parry & William A. Pizer, 2010. "Designing Climate Mitigation Policy," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 903-934, December.
    7. Andor, Mark & Voss, Achim, 2016. "Optimal renewable-energy promotion: Capacity subsidies vs. generation subsidies," Resource and Energy Economics, Elsevier, vol. 45(C), pages 144-158.
    8. Rob Aalbers & Victoria Shestalova & Viktoria Kocsis, 2012. "Innovation policy for directing technical change in the power sector," CPB Discussion Paper 223, CPB Netherlands Bureau for Economic Policy Analysis.
    9. repec:zbw:rwirep:0473 is not listed on IDEAS
    10. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    11. De Cian, Enrica & Tavoni, Massimo, 2012. "Do technology externalities justify restrictions on emission permit trading?," Resource and Energy Economics, Elsevier, vol. 34(4), pages 624-646.
    12. World Bank Group, 2018. "Strategic Use of Climate Finance to Maximize Climate Action," World Bank Publications - Reports 30475, The World Bank Group.
    13. van den Bijgaart, Inge, 2017. "The unilateral implementation of a sustainable growth path with directed technical change," European Economic Review, Elsevier, vol. 91(C), pages 305-327.
    14. Guy Meunier, 2015. "Prices vs. quantities in presence of a second, unpriced, externality," Working Papers hal-01242040, HAL.
    15. Adrien Vogt-Schilb & Guy Meunier & Stéphane Hallegatte, 2013. "Should marginal abatement costs differ across sectors? The effect of low-carbon capital accumulation," Working Papers hal-00850682, HAL.
    16. Mattauch, Linus & Creutzig, Felix & Edenhofer, Ottmar, 2015. "Avoiding carbon lock-in: Policy options for advancing structural change," Economic Modelling, Elsevier, vol. 50(C), pages 49-63.
    17. Matti Liski & Iivo Vehviläinen, 2016. "Gone with the Wind? An Empirical Analysis of the Renewable Energy Rent Transfer," CESifo Working Paper Series 6250, CESifo.
    18. Baldwin, Elizabeth & Cai, Yongyang & Kuralbayeva, Karlygash, 2020. "To build or not to build? Capital stocks and climate policy∗," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    19. Ignazio Musu, 2010. "Green Economy: great expectation or big illusion?," Working Papers 2010_01, Department of Economics, University of Venice "Ca' Foscari".
    20. Joao J. M. Ferreira & Cristina Fernandes & Vanessa Ratten, 2019. "The effects of technology transfers and institutional factors on economic growth: evidence from Europe and Oceania," The Journal of Technology Transfer, Springer, vol. 44(5), pages 1505-1528, October.
    21. Shiell, Leslie & Lyssenko, Nikita, 2014. "Climate policy and induced R&D: How great is the effect?," Energy Economics, Elsevier, vol. 46(C), pages 279-294.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:19:y:2011:i:1:p:33-41. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.