The optimal percentage requirement and welfare comparisons in a two-country electricity market with a common tradable green certificate system

Yan-ming, Sun

doi:10.1016/j.econmod.2016.02.019

Cited by 16 publications

(2 citation statements)

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“…They also analyzed the case where both countries noncooperatively set their tax policies and examined the optimal response to their Nash pollution tax policies. Sun [23] discussed the optimal percentage requirement and welfare effects of a two-country electricity market with TGC system and found that full integration with a common TGC market is welfare superior to that of an entirely fossil fuel market with an optimal emissions standard. Helgesen and Tomasgard [14] studied the market power of TGC and welfare effects of a renewable power support scheme by formulating a multi-region partial equilibrium model, where they found that existing firms have to bear most of the deadweight losses from the policy.…”

Section: Literature Reviewmentioning

confidence: 99%

“…For a common electricity market to work, appropriate interconnection agreements and the transmission infrastructure connectivity between countries are basic conditions for markets' integration. In addition, an international TGC system requires co-existing national support schemes, such as feed-in tariffs and investment aid, for electricity from renewable sources to be harmonized across countries in order to make it more compatible with an integrated electricity market [7,23]. Therefore, restrictions in the transmission capacity under free trade between countries remains a problem.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

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Full Separation or Full Integration? An Investigation of the Optimal Renewables Policy Employing Tradable Green Certificate Systems in Two Countries’ Electricity Markets

Yan-ming

Lin

2019

IJERPH

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Tradable green certificate (TGC) systems are increasingly used to promote renewable energy generation and mitigate greenhouse gas emissions. In this paper, we investigate the performance of the optimal renewables policy under full separation and full integration scenarios for two countries with TGCs. Our analysis suggests that under full separation, one country’s optimal renewable quota, which maximizes its own welfare, is strategically substitutional for the other country’s in a Cournot Nash equilibrium of the monopolistic market, when cross-border pollution exists. A country tends to become the “leader” in the market by using an information advantage to gain higher welfare. Using geometric illustrations we demonstrate the possibility that a potentially fully integrated electricity market under a TGC system can improve welfare for each country, when compensation between the countries is possible. From a policy point of view, this is significant in support of the demand for a convergence of national renewable policy schemes, where countries cooperate on solving cross-border environmental problems.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%