Comparing Volume and Blend Renewable Energy Mandates under a Carbon Budget

Jean-Pierre Amigues, Ujjayant Chakravorty, Gilles Lafforgue and Michel Moreaux

Annals of Economics and Statistics, 2022, issue 147, 51-78

Abstract: In order to encourage substitution of fossil fuels by cleaner renewables, regulatory agencies generally chose between two types of energy standards. They can either mandate a minimum volume of renewable energy, or they can specify a minimum share of renewables in the energy-mix as in Europe. This paper uses a simple model to compare the dynamic effects of these two policies under a given carbon budget constraint. Assuming the same budget to be exhausted at the same time, we show that a volume mandate leads to a lower energy price, induces a greater subsidy on clean energy and a smaller fossil fuel tax than the blend mandate. The volume mandate also leads to larger cumulative renewable energy use over the time horizon. We illustrate the model with plausible parameter values and show that the two energy mandates lead to significant differences in the price of carbon.

Keywords: Renewable Energy Mandates; Fossil Fuels; Energy Transition; Subsidies; Carbon Taxes (search for similar items in EconPapers)
JEL-codes: Q42 Q48 Q54 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Comparing volume and blend renewable energy mandates under a carbon budget (2020)
Working Paper: Comparing volume and blend renewable energy mandates under a carbon budget (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2022:i:147:p:51-78

DOI: 10.2307/48684786

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