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Tradable Performance Standards for a Greener Automobile Sector: An Economists’ Appraisal of the German Greenhouse Gas Mitigation Quota

Author

Listed:
  • Liepold, Constanze

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Fabianek, Paul

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

The Greenhouse Gas (GHG) Mitigation Quota is a unique instrument in Europe that redistributes money from high emission to low emission fuel markets, while forcing fuel distributors to reduce the average emissions of their fuels. This paper presents the design of the German 2022 GHG Quota, places it in the context of environmental policy instruments, and examines its impact on the affected fuel markets in relation to other environmental policy instruments. We aim to identify the strengths and weaknesses of the GHG Quota Trading as an alternative to allowance trading and carbon taxes, deliver results that can be applied in industry and policy making, and provide a basis for further research. Field research was conducted in the form of expert interviews. Furthermore, intermediaries and brokers were contacted via email and asked for transaction data. In addition, a qualitative literature review was conducted and publications of responsible authorities as well as relevant legal texts, were used to gather information. We find that the GHG Quota Trading overlaps with the instruments emission standards and emission trading scheme and therefore falls under the category of tradable performance standards. However, it also contains aspects of a subsidy and interacts directly or indirectly with several different markets

Suggested Citation

  • Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2023. "Tradable Performance Standards for a Greener Automobile Sector: An Economists’ Appraisal of the German Greenhouse Gas Mitigation Quota," FCN Working Papers 9/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2023_009
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    References listed on IDEAS

    as
    1. Kathleen Meisel & Markus Millinger & Karin Naumann & Franziska Müller-Langer & Stefan Majer & Daniela Thrän, 2020. "Future Renewable Fuel Mixes in Transport in Germany under RED II and Climate Protection Targets," Energies, MDPI, vol. 13(7), pages 1-18, April.
    2. Burtraw, Dallas & Fraas, Arthur G. & Richardson, Nathan, 2012. "Tradable Standards for Clean Air Act Carbon Policy," RFF Working Paper Series dp-12-05, Resources for the Future.
    3. Nelson, Tim & Reid, Cameron & McNeill, Judith, 2015. "Energy-only markets and renewable energy targets: Complementary policy or policy collision?," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 25-42.
    4. Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2023. "A Critical Evaluation of the 2022 Greenhouse Gas Mitigation Quota in Germany from an Environmental Economics and Policy Perspective," FCN Working Papers 10/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
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    Cited by:

    1. Casas Ferrús, M. Nieves & Ruhnau, Oliver & Madlener, Reinhard, 2023. "Portfolio Effects in Green Hydrogen Production Under Temporal Matching Requirements," FCN Working Papers 18/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    2. Fabianek, Paul & Glensk, Barbara & Madlener, Reinhard, 2024. "A sequential real options analysis for renewable power-to-hydrogen plants for Germany and California," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).
    3. Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2023. "A Multi-Criteria Assessment Framework for Direct Load Control in Residential Buildings from an Occupants’ Perspective," FCN Working Papers 15/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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    More about this item

    Keywords

    GHG Quota; environmental policy instrument; poolers;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B55 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Social Economics

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