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Environmental Policy with Green Consumerism

Stefan Ambec and Philippe De Donder ()

Working Papers from HAL

Abstract: The presence of consumers able to respond to changes in wholesale electricity prices facilitates the penetration of renewable intermittent sources of energy such as wind or sun power. We investigate how adapting demand to intermittent electricity supply by making consumers price-responsive - thanks to smart meters and home automation appliances - impacts the energy mix. We show that it almost always reduces carbon emissions. Furthermore, when consumers are not too risk-averse, demand response is socially beneficial because the loss from exposing consumers to volatile prices is more than offset by lower production and environmental costs. However, the gain is decreasing when the proportion of reactive consumers increases. Therefore, depending on the costs of the necessary smart hardware, it may be non-optimal to equip the whole population.

Keywords: Environmental regulation; Corporate social responsibility; Green consumerism; Product differentiation; Tax; Standard; Green label; Political economy (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-02945517
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Working Paper: Environmental Policy with Green Consumerism (2020) Downloads
Working Paper: Environmental Policy with Green Consumerism (2020) Downloads
Working Paper: Environmental Policy with Green Consumerism (2020) Downloads
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