Interaction of Carbon Reduction and Green Energy Promotion in a Small Fossil-Fuel Importing Economy

Rüdiger Pethig and Christian Wittlich

No 2749, CESifo Working Paper Series from CESifo

Abstract: We study the incidence of carbon-reduction and green-energy promotion policies in an open fossil-fuel importing general equilibrium economy. The focus is on mixed price-based or quantity-based policies. Instruments directed toward promoting green energy are shown to reduce also carbon emissions and vice versa. Their direct effects are stronger than their side effects, the more so, the greater is the elasticity of substitution in consumption between en-ergy and the consumption good. We calculate the effects of variations in individual policy parameters, especially on energy prices and welfare costs, and determine the impact of exoge-nous fossil-fuel price shocks on the economy.

Keywords: carbon reduction; green energy promotion; policy mix; interaction of policies (search for similar items in EconPapers)
JEL-codes: Q42 Q43 Q48 Q54 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (24)

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Working Paper: Interaction of carbon reduction and green energy promotion in a small fossil-fuel importing economy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2749

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