Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions?

Oskar Lecuyer () and Philippe Quirion

Working Papers from Chaire Economie du climat

Abstract: This article constitutes a new contribution to the analysis of overlapping instruments to cover the same emission sources. Using both an analytical and a numerical model, we find that when the risk that the CO2 price drops to zero and the political unavailability of a CO2 tax (at least in the European Union) are taken into account, it can be socially beneficial to implement an additional instrument encouraging the reduction of emissions, for instance a renewable energy subsidy. Our analysis has both a practical and a theoretical purpose. It aims at giving economic insight to policymakers in a context of increased uncertainty concerning the future stringency of the European Emission Trading Scheme. It also gives another rationale for the use of several instruments to cover the same emission sources, and shows the importance of accounting for corner solutions in the definition of the optimal policy mix

Keywords: Uncertainty; Policy overlapping; Mitigation policy; Energy policy; EU-ETS; Renewable energy; Corner solutions; Nil CO2 price; European Union (search for similar items in EconPapers)
JEL-codes: Q28 Q41 Q48 Q58 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (54)

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http://www.chaireeconomieduclimat.org/RePEc/cec/wp ... uyer-and-Quirion.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Can uncertainty justify overlapping policy instruments to mitigate emissions? (2013)
Working Paper: Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions? (2012)
Working Paper: Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions? (2012)
Working Paper: Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions ? (2012)
Working Paper: Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions? (2012)
Working Paper: Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions ? (2012)
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