A Critical Evaluation of the 2022 Greenhouse Gas Mitigation Quota in Germany from an Environmental Economics and Policy Perspective

Constanze Liepold (), Paul Fabianek () and Reinhard Madlener
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Constanze Liepold: E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), http://www.eonerc.rwth-aachen.de/fcn
Paul Fabianek: E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), http://www.eonerc.rwth-aachen.de/fcn

No 10/2023, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)

Abstract: This study aims at identifying the strengths and weaknesses of GHG Quota Trading as an alternative to allowance trading and carbon taxes. Information was gathered from the websites and publications of the responsible authorities and relevant legal texts. Moreover, literature on comparable environmental policy instruments was analyzed based on predefined criteria. Assumptions were made to create models in order to assess cost effectiveness, Pareto-efficiency, and dynamic incentive effects. The results show that the GHG Quota Trading only partially meets the basic criteria of environmental effectiveness, cost effectiveness, and Pareto-efficiency, and has further weaknesses regarding legitimacy and practical feasibility. In order to reduce GHG emissions from fossil fuels as efficiently as possible, a key policy priority should therefore be to adapt the GHG Quota Trading and to combine it systematically with other environmental economics policies such as a carbon tax.

Keywords: GHG Quota; environmental policy instruments; fuel market; Germany (search for similar items in EconPapers)
JEL-codes: F64 G28 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2023-08-01
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 (5)

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