How to achieve incentive regulation under renewable portfolio standards and carbon tax policy? A China's power market perspective

Zhao Xin-gang, Wu Ling and Zhou Ying

Energy Policy, 2020, vol. 143, issue C

Abstract: Renewable portfolio standards (RPS) and carbon tax policy, as efficient regulatory policy tools for realizing energy low-carbon transformation, can they achieve incentive regulation for power producers based on the decisive role of “visible hands” and “invisible hands” in the utilization and allocation of resources. It will become the critical scientific issue of China's power market reform. This paper constructs an equilibrium model of power market under the overlapping regulation of carbon tax policy and RPS, studies the influence of RPS and carbon tax policy on the power market, and analyzes whether they can help motivate green power producers to reduce production costs. The results show that the overlapping regulation can help to increase the proportion of renewable energy generation production in the power market and optimize the power supply structure. Still, it is difficult to form effective incentive regulation for power producers. On the premise of meeting the quota, the green power producers can increase the feed-in tariffs and achieve higher profits by colluding to realize cost padding. Therefore, the realization of incentive regulation is conducive to weaken information asymmetry to achieve the scientific regulation of power producers and effectively promote the process of China's power market reform.

Keywords: Renewable portfolio standards; Carbon tax; Incentive regulation; Cost padding (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:143:y:2020:i:c:s0301421520303189

DOI: 10.1016/j.enpol.2020.111576

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