 Decoupling the EU ETS from subsidized renewables and other demand side effects: lessons from the impact of the EU ETS on CO2 emissions in the German electricity sectorSebastian Schäfer Energy Policy, 2019, vol. 133, issue C Abstract: This paper analyzes the impact of the EU ETS on CO2 reduction in the German electricity sector. We find an ETS-induced emission abatement which is not exceeding 6% of total emissions with a maximum already in 2010. Thereafter the ETS has not induced additional reductions. This outcome corresponds to the recent debate about sub-optimal performance of the EU ETS caused by excessive allowances. Following up on this we develop a unilateral flexible cap to eliminate demand side effects which lead to excessive allowances. The unilateral flexible cap is based on emission intensities. Using the works of Newell and Pizer (2008); Sue Wing et al. (2009) we prove that an intensity-based emission cap is advantageous in the German electricity sector when compared to an absolute cap. An ex-post analysis shows that the amount of excessive allowances resulting from the economic crisis during the second trading period could have been significantly lowered with a unilateral flexible cap. This approach also decouples the EU ETS from a simultaneous promotion of renewable energy. Keywords: Decoupling overlapping regulations; Promotion of renewable energy; Impact of EU emissions trading; Intensity standard (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:133:y:2019:i:c:s0301421519304367 DOI: 10.1016/j.enpol.2019.06.066 Access Statistics for this article Energy Policy is currently edited by N. France More articles in Energy Policy from Elsevier |
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