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Why should support schemes for renewable electricity complement the EU emissions trading scheme?

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  • Lehmann, Paul
  • Gawel, Erik

Abstract

In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 52 (2013)
Issue (Month): C ()
Pages: 597-607

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Handle: RePEc:eee:enepol:v:52:y:2013:i:c:p:597-607

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: EU emissions trading system; Policy mix; Renewable energies;

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Cited by:
  1. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2013. "Polit-ökonomische Grenzen des Emissionshandels und ihre Implikationen für die klima- und energiepolitische Instrumentenwahl," UFZ Discussion Papers 2/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  2. Purkus, Alexandra & Gawel, Erik & Thrän, Daniela, 2012. "Bioenergy governance between market and government failures: A new institutional economics perspective," UFZ Discussion Papers 13/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  3. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2012. "The German Energiewende under attack: Is there an irrational Sonderweg?," UFZ Discussion Papers 15/2012, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  4. Manuel Frondel & Christoph M. Schmidt & Colin Vance, 2012. "Germany’s Solar Cell Promotion: An Unfolding Disaster," Ruhr Economic Papers 0353, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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