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Excess demand or excess supply? A comparison of renewable energy certificate markets in the United Kingdom and Australia

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  • Wang, Yunfei
  • Li, Jinke
  • O'Leary, Nigel
  • Shao, Jing

Abstract

Comparing the United Kingdom's Renewables Obligation and Australia's Renewable Energy Target, this paper reconstructs the market for green certificates in which penalties are imposed on missed certificates. Our analysis shows that excess demand in the Renewables Obligation makes the penalty the minimum certificate price, but excess supply in the Renewable Energy Target makes the penalty the maximum certificate price. Further, excess supply also implies that the sales of certificates are not guaranteed in the Renewable Energy Target. Therefore, compared to the Renewables Obligation, generators face greater risk under the Renewable Energy Target as there is more uncertainty about the price of certificates and the possibility of sales.

Suggested Citation

  • Wang, Yunfei & Li, Jinke & O'Leary, Nigel & Shao, Jing, 2024. "Excess demand or excess supply? A comparison of renewable energy certificate markets in the United Kingdom and Australia," Utilities Policy, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:juipol:v:86:y:2024:i:c:s0957178723002175
    DOI: 10.1016/j.jup.2023.101705
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    More about this item

    Keywords

    Tradable green certificates; Renewables obligation; Renewable energy target;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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