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Interactions of emission caps and renewable electricity support schemes

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  • Christoph Böhringer
  • Manuela Behrens

Abstract

Over the last decades many OECD countries have implemented green quotas, feed-in tariffs, or feed-in premiums to promote electricity production from renewable energy sources (RES-E). More recently, these RES-E policies are overlaid with emission caps to reduce $$\hbox {CO}_2$$ CO 2 emissions. In this paper we investigate how emission caps change the electricity market outcome of pre-existing support schemes for renewable electricity production: with a green quota RES-E production declines, while it remains constant for feed-in tariffs, and expands for feed-in premiums; across all three RES-E policies an emission cap drives up the consumer electricity price with the price increase being lowest for the case of feed-in premiums; the economic adjustment cost to emission caps on the other hand turn out to be highest for pre-existing feed-in premiums, followed by feed-in tariffs and green quotas. Copyright Springer Science+Business Media New York 2015

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  • Christoph Böhringer & Manuela Behrens, 2015. "Interactions of emission caps and renewable electricity support schemes," Journal of Regulatory Economics, Springer, vol. 48(1), pages 74-96, August.
    • Handle: RePEc:kap:regeco:v:48:y:2015:i:1:p:74-96
    DOI: 10.1007/s11149-015-9279-x
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    2. Paolo Falbo & Cristian Pelizzari & Luca Taschini, 2019. "Renewables, Allowances Markets, and Capacity Expansion in Energy-Only Markets," The Energy Journal, , vol. 40(6), pages 41-78, November.
    3. Jan Abrell & Mirjam Kosch, 2022. "The Impact of Carbon Prices on Renewable Energy Support," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 9(3), pages 531-563.
    4. Jie Wu & Ying Fan & Yan Xia, 2017. "How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?," Energies, MDPI, vol. 10(8), pages 1-20, August.
    5. Böhringer, Christoph & Cuntz, Alexander & Harhoff, Dietmar & Asane-Otoo, Emmanuel, 2017. "The impact of the German feed-in tariff scheme on innovation: Evidence based on patent filings in renewable energy technologies," Energy Economics, Elsevier, vol. 67(C), pages 545-553.
    6. Schusser, Sandra & Jaraitė, Jūratė, 2018. "Explaining the interplay of three markets: Green certificates, carbon emissions and electricity," Energy Economics, Elsevier, vol. 71(C), pages 1-13.
    7. Pavel Tcvetkov, 2021. "Climate Policy Imbalance in the Energy Sector: Time to Focus on the Value of CO 2 Utilization," Energies, MDPI, vol. 14(2), pages 1-22, January.
    8. Goekce Akin-Olçum & Christoph Boehringer & Thomas Rutherford & Andrew Schreiber, 2019. "Economic and Environmental Impacts of a Carbon Adder in New York," Working Papers V-424-19, University of Oldenburg, Department of Economics, revised Sep 2019.
    9. Currier, Kevin M. & Rassouli-Currier, Susanne, 2018. "Producer incentives in electricity markets with green quotas and tradable certificates," Utilities Policy, Elsevier, vol. 55(C), pages 59-68.
    10. Currier, Kevin M., 2016. "Incentives for cost reduction and cost padding in electricity markets with overlapping “green” regulations," Utilities Policy, Elsevier, vol. 38(C), pages 72-75.
    11. Yongna Yuan & Guiyu Li & Hongbo Duan, 2023. "The Achievement of Multiple Nationally Determined Contribution Goals and Regional Economic Development in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 1155-1177, April.
    12. Wenhui Zhao & Xiongjiantao Bao & Guanghui Yuan & Xiaomei Wang & Hongbo Bao, 2019. "The Equilibrium Model for the Coexistence of Renewable Portfolio Standards and Emissions Trading: The Supply Chain Analysis," Energies, MDPI, vol. 12(3), pages 1-29, January.
    13. Bao, Xiongjiantao & Zhao, Wenhui & Wang, Xiaomei & Tan, Zhongfu, 2019. "Impact of policy mix concerning renewable portfolio standards and emissions trading on electricity market," Renewable Energy, Elsevier, vol. 135(C), pages 761-774.
    14. Thomas F. Rutherford & Andrew Schreiber, 2019. "Tools for Open Source, Subnational CGE Modeling with an Illustrative Analysis of Carbon Leakage," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(2), pages 1-66, December.

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    More about this item

    Keywords

    Overlapping regulation; Renewable electricity support schemes; Emission caps; Q48; Q58; H23;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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