EconPapers    
Economics at your fingertips  
 

Are renewable energy policies climate friendly? The role of capacity constraints and market power

Min Wang and Jinhua Zhao

Journal of Environmental Economics and Management, 2018, vol. 90, issue C, 41-60

Abstract: This paper studies the impacts of renewable energy support policies on energy prices, fossil fuel supply and thus carbon emissions from fossil fuels. Such supports are climate friendly if the renewables are already competitive against fossil fuels. But if the renewables are not yet competitive, the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure. If the renewables do not have capacity constraints, then the subsidies are subject to the Green Paradox under perfect competition, but might be climate friendly under monopoly. Supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time, and these effects are reversed under monopoly. Our results highlight the importance of considering the long-term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints.

Keywords: Green paradox; Capacity constraints; Market power; Carbon accounting; Climate change (search for similar items in EconPapers)
JEL-codes: Q48 Q54 H23 Q38 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069616300535
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:90:y:2018:i:c:p:41-60

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-11-16
Handle: RePEc:eee:jeeman:v:90:y:2018:i:c:p:41-60