Low Carbon Electricity Investment: The Limitations of Traditional Approaches and a Radical Alternative
AbstractMoving to a very low carbon electricity system is central to meeting the goals of UK energy policy, and indeed to the wider global challenge of tackling climate change. This will require massive investment in low carbon electricity sources. This working paper identifies four key difficulties with the current mainstream approach of relying on the impact of a carbon price in the present liberalised electricity market, supplemented with additional incentive mechanisms like renewable obligation certificates and feed-in tariffs. We then summarise alternate mechanisms and propose a new approach, aimed at harnessing the potential interest and capital of electricity consumers, large and small, directly in funding low carbon electricity investments, in the form of longterm ‘Green Power’ contracts that operate in a separate, differentiated contract market.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1057.
Date of creation: 01 Oct 2010
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Electricity; Renewables; Climate Change; Green Power;
Find related papers by JEL classification:
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
- NEP-ENE-2010-10-23 (Energy Economics)
- NEP-ENV-2010-10-23 (Environmental Economics)
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- Krahé, Max & Heidug, Wolf & Ward, John & Smale, Robin, 2013. "From demonstration to deployment: An economic analysis of support policies for carbon capture and storage," Energy Policy, Elsevier, vol. 60(C), pages 753-763.
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