Green Serves the Dirtiest. On the Interaction between Black and Green Quotas

Christoph Böhringer and Knut Einar Rosendahl

Discussion Papers from Statistics Norway, Research Department

Abstract: Tradable black (CO2) and green (renewables) quotas gain in popularity and stringency within climate policies of many OECD countries. The overlapping regulation through both instruments, however, may have important adverse economic implications. Based on stylized theoretical analysis and substantiated with numerical model simulations for the German electricity market, we show that a green quota imposed on top of a black quota does not only induce substantial excess cost but serves the dirtiest power technologies as compared to a black quota regime only.

Keywords: Emissions Trading; Tradable Green Certificates; Overlapping Regulation (search for similar items in EconPapers)
JEL-codes: D61 H21 H22 Q58 (search for similar items in EconPapers)
Date: 2009-04
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 (17)

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Working Paper: Green Serves the Dirtiest: On the Interaction between Black and Green Quotas (2009)
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