Reconciling Emissions Trading and the Promotion of Renewable Energy
Sebastian Schaefer ()
Additional contact information
Sebastian Schaefer: University of Siegen
MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)
Abstract:
The EU emissions trading system (ETS) and the promotion of renewable energy are overlapping regulations. Although the resulting early development of renewables is associated with several advantages such an overlap may violate the path of optimal abatement. Subsidies may cause a too high share of renewables in electricity generation. This results in additional expenses and efficiency losses. We develop a control mechanism serving as thumb rule to limit additional expenses. Under optimal implementation the rule signicantly restricts additional expenses to a maximum of about 4 % of total abatement costs in worst case. This result holds for marginal abatement costs (MAC) approximated by any conical combination of weak convex power functions. This means high exibility of MAC leading to high validity of the results. Consequences of a non-optimal implementation of the mechanism are examined as well. An empirical application to German data shows that the promotion of renewable energy has not yet violated the path of optimal abatement. However, data is restricted because the ETS has not induced an additional emission reduction since 2010.
Keywords: Overlapping Regulations; Promotion of Renewable Energy; Emissions Trading (search for similar items in EconPapers)
JEL-codes: D61 H23 Q42 Q48 Q54 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations:
Forthcoming in
Downloads: (external link)
http://www.uni-marburg.de/fb02/makro/forschung/mag ... 36-2018_schaefer.pdf First 201836 (application/pdf)
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:mar:magkse:201836
Access Statistics for this paper
More papers in MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) Contact information at EDIRC.
Bibliographic data for series maintained by Bernd Hayo ().