Economy-wide benefits and costs of local-level energy transition in Austrian Climate and Energy Model Regions

Thomas Schinko (schinko@iiasa.ac.at), Birgit Bednar-Friedl (birgit.friedl@uni-graz.at), Barbara Truger, Rafael Bramreiter, Nadejda Komendantova and Michael Hartner
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Thomas Schinko: International Institute for Applied Systems Analysis (IIASA), Austria
Birgit Bednar-Friedl: University of Graz, Austria
Barbara Truger: University of Graz, Austria
Rafael Bramreiter: University of Graz, Austria
Nadejda Komendantova: University of Graz, Austria
Michael Hartner: Energy Economics Group, TU Wien, Austria

No 2020-05, Graz Economics Papers from University of Graz, Department of Economics

Abstract: To achieve a low-carbon transition in the electricity sector, countries combine national-scale policies with regional renewable electricity (RES-E) initiatives. Taking Austria as an example, we investigate the economy-wide effects of implementing national-level feed-in tariffs alongside local-level climate and energy model (CEM) regions , taking account of policy externalities across the two governance levels. We distinguish three types of CEM regions by means of a cluster analysis and apply a sub-national Computable General Equilibrium (CGE) model to investigate two RES-E scenarios. We find that whether the net economic effects are positive or negative depends on three factors: (i) RES-E potentials, differentiated by technology and cluster region; (ii) economic competitiveness of RES-E technologies relative to each other and to the current generation mix; and (iii) support schemes in place which translate into policy costs. We conclude that the focus should mainly be on economically competitive technologies, such as PV and wind, to avoid unintended macroeconomic side-effects. To achieve that, national support policies for RES-E have to be aligned with regional energy initiatives.

Keywords: energy transition; computable general equilibrium (CGE); national support policies; regional energy initiatives; policy externality (search for similar items in EconPapers)
JEL-codes: C68 Q42 R13 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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