Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies

Madlener, Reinhard; Neustadt, Ilja; Zweifel, Peter

doi:10.2139/ssrn.1620409

Cited by 82 publications

(8 citation statements)

References 58 publications

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“…Menanteau, 2003;Haas et al 2004;Haas et al 2010;Held 2006;Madlener et al 2009). Also, the majority of European countries aiming at achieving the 20%…”

Section: Decentralizing An Res-e Quota Target By a A Feed-in-tariff Omentioning

confidence: 99%

Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares

Requate

2014

Environ Econ Policy Stud

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper analyzes the relationship between CO2 mitigation policy and promotion policies designed to deploy renewable energy sources for electricity production (RES-E). If an emission cap is the only policy target, an optimal mix consisting of high and low carbon use of fossil fuels, deployment of RES-E, and energy savings can best be achieved by either setting a uniform carbon tax or by implementing a cap-and-trade system covering all CO2 Terms of use: Documents in EconStor maysources. An additional RES-E share target causes higher costs in achieving the cap. Conversely, a more ambitious emission target automatically increases the RES-E share. In a second step we investigate different policies for inducing an RES-E quota. Such a quota can be efficiently achieved either by a system of tradable green certificates or by a budgetbalancing premium system. A budget-balancing FIT system, by contrast, is not efficient, since it generates excessive fiscal distortion. We also show that differentiated, technology-specific FITs are even more inefficient.JEL-Code: L380, L510, L940, Q280, Q420, Q550.Keywords: feed-in tariffs, tradable green certificates, premium systems, emission cap, cap and trade. IntroductionFor the period 2008-2012, Annex I countries that have ratified the Kyoto protocol are committed to an average reduction of their CO 2 emissions to 5.2% below the 1990 level.Broadly speaking, there are four ways of achieving this target: reducing the output of primary and secondary energy use and of other CO 2 -intensive products, enhancing energy efficiency (i.e. producing the same amount of output with less carbon input), substituting low-carbon fossil fuels (such as natural gas) for carbon-intensive fuels (like lignite and hard coal), and generally replacing fossil fuels by increasing the share of renewable energy sources (RES).An efficient mix of all these measures would be the optimal solution. To make the allocation of such CO 2 reduction efforts work, the marginal opportunity costs of all these measures have to be equal. Following this rule, CO 2 reductions will be maximal given a fixed amount of financial resources. To meet their joint target at the lowest possible cost, signatory countries could implement a rigorous cap-and-trade system (or charge a corresponding uniform carbon tax) covering all their CO 2 sources. If the whole world implemented a cap-and-trade system (or a uniform carbon tax) covering all sources of carbon, that of course would be bet...

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“…Menanteau, 2003;Haas et al 2004;Haas et al 2010;Held 2006;Madlener et al 2009). Also, the majority of European countries aiming at achieving the 20%…”

Section: Decentralizing An Res-e Quota Target By a A Feed-in-tariff Omentioning

confidence: 99%

Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares

Requate

2014

Environ Econ Policy Stud

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“…In this study, we first evaluate the prices published by the European Energy Exchange (EEX) for the commodities electricity, natural gas and European Union Emission Allowances (EUAs) for a historical consideration of the years [2008][2009][2010][2011]. Next, we introduce effective strategies that enable the hedging of the price risks occurring when operating a CC-CHP plant.…”

Section: Related Literature and Methods Adoptedmentioning

confidence: 99%

“…In a next step, the price developments of electricity, natural gas, and CO 2 certificates are analyzed and the strategies scrutinized ex post with regard to their profitability. In order to support the selection of future strategies on scientific grounds, price developments of the years [2008][2009][2010][2011] are parameterized on the basis of statistical testing, and suitable probability distributions are estimated. These distributions serve to feed a model with data, which in the framework of a Monte Carlo simulation allows the assessing of the Value at Risk (VaR) for the choice of an individual strategy.…”

Section: Introductionmentioning

confidence: 99%

Evaluation of different hedging strategies for commodity price risks of industrial cogeneration plants

2013

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“…The bulk of the literature discussing policies promoting RES-E favors FITs over tradable green certificates (see e.g. Menanteau, 2003;Haas et al 2004;Haas et al 2010;Held 2006;Madlener et al 2009). Also, the majority of European countries aiming at achieving the 20%…”

Section: Decentralizing An Res-e Quota Target By a A Feed-in-tariff Or A Premium System;mentioning

confidence: 99%

Green Tradable Certificates versus Feed-In Tariffs in the Promotion of Renewable Energy Shares

Requate

2014

SSRN Journal

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Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies

Cited by 82 publications

References 58 publications

Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares

Green tradable certificates versus feed-in tariffs in the promotion of renewable energy shares

Evaluation of different hedging strategies for commodity price risks of industrial cogeneration plants

Green Tradable Certificates versus Feed-In Tariffs in the Promotion of Renewable Energy Shares

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