Environmental and Technology Policy Options in the Electricity Sector: Are We Deploying Too Many?

Carolyn Fischer, Louis Preonas () and Richard Newell

Journal of the Association of Environmental and Resource Economists, 2017, vol. 4, issue 4, 959 - 984

Abstract: Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy efficiency (EE). Prior literature has argued that overlapping policies reduce the efficiency of emissions markets, absent other market failures. We extend the model of Fischer and Newell to incorporate knowledge spillovers for both advanced and conventional renewable energy technologies, as well as imperfections in demand for EE investments. EE undervaluation can justify interventions and raises the importance of fully pricing the social costs of electricity, making policies (like renewable subsidies) that lower electricity prices less desirable. Innovation market failures justify some technology policies, particularly correcting R&D incentives, but aggressive deployment policies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. Even with multiple market failures, emissions pricing remains the most cost-effective option for reducing emissions. However, technology-oriented policies can involve less redistribution of surplus.

Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://dx.doi.org/10.1086/692507 (application/pdf)
http://dx.doi.org/10.1086/692507 (text/html)
Access to the online full text or PDF requires a subscription.

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:ucp:jaerec:doi:10.1086/692507

Access Statistics for this article

More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().