Support schemes for renewable electricity in the EU
AbstractThis paper discusses the level and design of support schemes used to promote renewable electricity in Europe. A theoretical model is presented to determine optimal renewable energy policies. Policies that solely aim to address environmental externalities and energy security risks are unlikely to make renewable power technologies competitive. Learning effects and spillovers are necessary to justify the need for support schemes. The analysis suggests that feed-in premiums guaranteed in addition to the electricity market price should be preferred over feed-in tariffs, which provide the eligible power producer with a guaranteed price. The premiums should be time limited and frequently reviewed. Once the technology becomes competitive, tradable green certificates would be a more suitable support instrument. As regards wind energy, the available estimates of externalities suggest that levels are probably too high in many Member States. In addition, the current promotion of photovoltaics could possibly be more cost-efficient if it targeted technology development more directly.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 408.
Length: 61 pages
Date of creation: Apr 2010
Date of revision:
Contact details of provider:
Postal: Coomunivcations Unit, B-1049 Bruxelles / Brussels
Fax: +32 2 298.08.23
Web page: http://ec.europa.eu/economy_finance/index_en.htm
More information through EDIRC
european union; eu; setzer; wolff; van den Noord; euro area; money; heterogeneity; money holdings;
Find related papers by JEL classification:
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-08 (All new papers)
- NEP-ENE-2010-05-08 (Energy Economics)
- NEP-ENV-2010-05-08 (Environmental Economics)
- NEP-EUR-2010-05-08 (Microeconomic European Issues)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lehmann, Paul, 2009.
"Climate policies with pollution externalities and learning spillovers,"
UFZ Discussion Papers
10/2009, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
- Lehmann, Paul, 2009. "Climate Policies with Pollution Externalities and Learning Spillovers," MPRA Paper 21353, University Library of Munich, Germany.
- Papineau, Maya, 2006. "An economic perspective on experience curves and dynamic economies in renewable energy technologies," Energy Policy, Elsevier, vol. 34(4), pages 422-432, March.
- Fischer, Carolyn & Newell, Richard G., 2008.
"Environmental and technology policies for climate mitigation,"
Journal of Environmental Economics and Management,
Elsevier, vol. 55(2), pages 142-162, March.
- Fischer, Carolyn & Newell, Richard, 2004. "Environmental and Technology Policies for Climate Mitigation," Discussion Papers dp-04-05, Resources For the Future.
- Nick Johnstone & Ivan Hascic & David Popp, 2008.
"Renewable Energy Policies And Technological Innovation: Evidence Based On Patent Counts,"
NBER Working Papers
13760, National Bureau of Economic Research, Inc.
- Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
- Jeroen de Joode & Douwe Kingma & Mark Lijesen, 2004. "Energy policies and risks on energy markets; a cost-benefit analysis," CPB Special Publication 51, CPB Netherlands Bureau for Economic Policy Analysis.
- del Rio, Pablo, 2005. "A European-wide harmonised tradable green certificate scheme for renewable electricity: is it really so beneficial?," Energy Policy, Elsevier, vol. 33(10), pages 1239-1250, July.
- Bläsi, Albrecht & Requate, Till, 2005. "Learning-by-Doing with Spillovers in Competitive Industries, Free Entry, and Regulatory Policy," Economics Working Papers 2005,09, Christian-Albrechts-University of Kiel, Department of Economics.
- William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
- Arthur van Benthem & Kenneth Gillingham & James Sweeney, 2008. "Learning-by-Doing and the Optimal Solar Policy in California," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 131-152.
- Patrik Söderholm & Ger Klaassen, 2007. "Wind Power in Europe: A Simultaneous Innovation–Diffusion Model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(2), pages 163-190, February.
- Johanna Reichenbach & Till Requate, 2011.
"Subsidies for Renewable Energies in the Presence of Learning Effects and Market Power,"
Kiel Working Papers
1689, Kiel Institute for the World Economy.
- Reichenbach, Johanna & Requate, Till, 2012. "Subsidies for renewable energies in the presence of learning effects and market power," Resource and Energy Economics, Elsevier, vol. 34(2), pages 236-254.
- Katja Schumacher & Michael Kohlhaas, 2007. "Learning-by-Doing in the Renewable Energy Equipment Industry or in Renewable Electricity Production: Why Does It Matter to Differentiate?," Discussion Papers of DIW Berlin 692, DIW Berlin, German Institute for Economic Research.
- Kruyt, Bert & van Vuuren, D.P. & de Vries, H.J.M. & Groenenberg, H., 2009. "Indicators for energy security," Energy Policy, Elsevier, vol. 37(6), pages 2166-2181, June.
- Larsson, Simon & Fantazzini, Dean & Davidsson, Simon & Kullander, Sven & Hook, Mikael, 2013. "Reviewing electricity production cost assessments," MPRA Paper 50306, University Library of Munich, Germany.
- Janina Ketterer & Jana Lippelt, 2011. "Kurz zum Klima: Zur Entwicklung der erneuerbaren Energien," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(21), pages 37-40, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ECFIN INFO).
If references are entirely missing, you can add them using this form.