The Main Support Mechanisms to Finance Renewable Energy Development

Shahrouz Abolhosseini and Almas Heshmati ()

No 373, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Considering that the major part of greenhouse gases is carbon dioxide, there is a global concern aimed at reducing carbon emissions. Additionally, major consumer countries are looking for alternative sources of energy to avoid the impact of higher fossil fuel prices and political instability in the major energy supplying countries. In this regard, different policies could be applied to reduce carbon emissions, such as enhancing renewable energy deployment and encouraging technological innovation and creation of green jobs. There are three main support mechanisms employed by governments to finance renewable energy development programs: feed-in-tariffs, tax incentives, and tradable green certificates. Considering that many of the promising technologies to deploy renewable energy require investment in small-scale energy production systems, these mechanisms could be used to enhance renewable energy development at the desired scale. Employing a carbon emission tax or emission trading mechanism could be considered ideal policies to mitigate emissions at the lowest cost. The comparison of feed-in-tariffs and renewable portfolio standard policies showed that the former is good when a policy to develop renewable energy sources with a low level of risk for investors is considered. However, the latter is an appropriate policy when a market view policy is applied by the government.

Keywords: Renewable energy; financing renewable energy; feed-in-tariffs; tax incentives; tradable green certificates; carbon emission tax; green jobs (search for similar items in EconPapers)
JEL-codes: H23 L71 O13 O31 Q27 Q42 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-08-25
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (70)

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Related works:
Journal Article: The main support mechanisms to finance renewable energy development (2014)
Working Paper: The Main Support Mechanisms to Finance Renewable Energy Development (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0373

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