The economic impact of the Green Certificate market through the Macro Multiplier approach

Maurizio Ciaschini, Rosita
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Maurizio Ciaschini, Rosita: University of Macerata, Politechnical University of Marche
Authors registered in the RePEc Author Service: Maurizio Ciaschini, Claudio Socci, Francesca Severini () and Rosita Pretaroli ()

No 26-2010, Working Papers from Macerata University, Department of Studies on Economic Development (DiSSE)

Abstract: In the last decade, as many other European countries, the Italian Government adopted several reforms in order to increase the use of Renewable Energy Sources (RES). The liberalization of the electricity market that represent one of these reforms aims to reach environmental benefits from the substitution of fossil fuel with renewable sources.The Italian Green Certificate market was introduced in 2002 in order to accomplish this objective and represents a mechanism where a quota of renewable electricity is imposed to suppliers in proportion to their sales. The electricity industries are obliged to meet this condition by producing the quantity of renewable electricity by means of a change in their production process, otherwise they must buy a number of certificates corresponding to the quota. This mechanism changes the importance of the electricity industry first in promoting climate protection, than in terms of the impact in the economy as a whole. A policy aimed to develop the market of green certificates may lead to environmental improvement by switching the energy production process to renewable resources. But above all an increase in demand for green certificates, resultant from a reform on the quota of renewable electricity, can generate positive change in all components of the industrial production. For this purpose, the paper aims to quantify the economic impact of a reform on Green Certificate market for the Italian system by means of the Macro Multiplier (MM) approach. The analysis is performed through the Hybrid Input-Output (I-O) model that allows expressing the energy flows in physical terms (GWh) while all other flows are expressed in monetary terms (e). Moreover, through the singular value decomposition of the inverse matrix of the model, which reveals he set of key structures of the exogenous change of final demand, we identify the appropriate key structure ble to obtain both the expected positive total output change and the increase of electricity roduction from RES.

Keywords: Hybrid I-O model; Macro Multiplier; Environmental Policy (search for similar items in EconPapers)
JEL-codes: O1 O11 (search for similar items in EconPapers)
Date: 2010-05, Revised 2010-05
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: The Economic Impact of the Green Certificate Market through the Macro Multiplier Approach (2010)
Working Paper: The Economic Impact of the Green Certificate Market through the Macro Multiplier Approach (2010)
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