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Interaction of Carbon Reduction and Green Energy Promotion in a Small Fossil-Fuel Importing Economy

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Author Info
Rüdiger Pethig ()
Christian Wittlich ()

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Abstract

We study the incidence of carbon-reduction and green-energy promotion policies in an open fossil-fuel importing general equilibrium economy. The focus is on mixed price-based or quantity-based policies. Instruments directed toward promoting green energy are shown to reduce also carbon emissions and vice versa. Their direct effects are stronger than their side effects, the more so, the greater is the elasticity of substitution in consumption between en-ergy and the consumption good. We calculate the effects of variations in individual policy parameters, especially on energy prices and welfare costs, and determine the impact of exoge-nous fossil-fuel price shocks on the economy.

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File URL: http://www.cesifo.de/DocCIDL/cesifo1_wp2749.pdf
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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2749.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2749

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Related research
Keywords: carbon reduction; green energy promotion; policy mix; interaction of policies;

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Find related papers by JEL classification:
Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters

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This page was last updated on 2009-11-3.

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