Climate Policies with Pollution Externalities and Learning Spillovers

Paul Lehmann

MPRA Paper from University Library of Munich, Germany

Abstract: Economic theory suggests that with a pollution externality and learning spillovers related to renewable energy technologies, the optimal climate policy mix includes an emissions policy and an output subsidy to the learning industry. Instead of output subsidies, feed-in tariffs are often implemented in addition to emissions policies. This paper reveals that this policy mix may theoretically provide for a first-best outcome as well. However, its efficient design may be cumbersome for regulators. An emissions tax must be below the Pigovian level and differentiate between fossil fuels. Moreover, both tax and feed-in tariff must be adapted continuously.

Keywords: emissions tax; feed-in tariffs; policy mix; spillovers; learning by doing (search for similar items in EconPapers)
JEL-codes: D62 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2009-10
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21353

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