Munich Personal RePEc Archive

The Interaction of Emissions Trading and Renewable Energy Promotion

Abrell, Jan and Weigt, Hannes (2008): The Interaction of Emissions Trading and Renewable Energy Promotion.

[img]
Preview
PDF
wp_egw_05_Abrell_Weigt_CGE_ETS_RES.pdf

Download (449kB) | Preview

Abstract

Given the ambitious goal of the European Union to achieve CO2 emission reduction, support to renewable energies, and increased energy efficiency a portfolio of different policies is going to be implemented or is already in place in the member states. These instruments have at least partly overlapping objectives; thus, a high degree of interaction is to be expected. In this paper we analyze how the EU ETS and renewable support mechanisms influence one another. We apply a static open economy computable general equilibrium (CGE) model of Germany incorporating different conventional and renewable generation technologies. We find that in case of an ETS with a green certificate trading scheme or a feed-in system the price for carbon drops to zero due to the high share of CO2-neutral renewable generation. Furthermore, the welfare reducing effect of an additional renewable support mechanism is rather low for both schemes.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.