Refunding ETS-Proceeds to Spur the Diffusion of Renewable Energies: An Analysis Based on the Dynamic Oligopolistic Electricity Market Model EMELIE
AbstractWe use a quantitative electricity market model to analyze the welfare effects of refunding a share of the emission trading proceeds to support renewable energy technologies that are subject to experience effects. We compare effects of supporting renewable energies under both perfect and oligopolistic competition with competitive fringe firms and emission trading regimes that achieve 70 and 80 percent emission reductions by 2050. The results indicate the importance of market power for renewable energy support policy. Under imperfect competition welfare improvements is maximized by refunding ten percent of the emission trading proceeds, while under perfect competition the optimal refunding share is only five percent. However, under both behavioral assumptions we find significant welfare improvements due to experience effects which are induced by the support for renewable energy.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 951.
Length: 19 p.
Date of creation: 2009
Date of revision:
Publication status: Published in: Utilities Policy 19 (2011) 1, 33-41
emission trading; renewable energy support; experience effects; imperfect competition;
Other versions of this item:
- Traber, Thure & Kemfert, Claudia, 2011. "Refunding ETS proceeds to spur the diffusion of renewable energies: An analysis based on the dynamic oligopolistic electricity market model EMELIE," Utilities Policy, Elsevier, vol. 19(1), pages 33-41, January.
- NEP-ALL-2009-12-11 (All new papers)
- NEP-ENE-2009-12-11 (Energy Economics)
- NEP-ENV-2009-12-11 (Environmental Economics)
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