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A Critical Evaluation of the 2022 Greenhouse Gas Mitigation Quota in Germany from an Environmental Economics and Policy Perspective

Author

Listed:
  • Liepold, Constanze

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Fabianek, Paul

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

This study aims at identifying the strengths and weaknesses of GHG Quota Trading as an alternative to allowance trading and carbon taxes. Information was gathered from the websites and publications of the responsible authorities and relevant legal texts. Moreover, literature on comparable environmental policy instruments was analyzed based on predefined criteria. Assumptions were made to create models in order to assess cost effectiveness, Pareto-efficiency, and dynamic incentive effects. The results show that the GHG Quota Trading only partially meets the basic criteria of environmental effectiveness, cost effectiveness, and Pareto-efficiency, and has further weaknesses regarding legitimacy and practical feasibility. In order to reduce GHG emissions from fossil fuels as efficiently as possible, a key policy priority should therefore be to adapt the GHG Quota Trading and to combine it systematically with other environmental economics policies such as a carbon tax.

Suggested Citation

  • Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2023. "A Critical Evaluation of the 2022 Greenhouse Gas Mitigation Quota in Germany from an Environmental Economics and Policy Perspective," FCN Working Papers 10/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2023_010
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    References listed on IDEAS

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    Cited by:

    1. Schöpper, Yannick & Digmayer, Claas & Bartusch, Raphaela & Ebrahim, Ola & Hermens, Sarah & Nejabat, Razieh & Steireif, Niklas & Wendorff, Jannik & Jakobs, Eva-Maria & Lohrberg, Frank & Madlener, Reinh, 2023. "Developing a Niche Readiness Level Model to Assess Socio-Economic Maturity: The Case of DC Technologies in the Transition to Flexible Electrical Networks," FCN Working Papers 11/2023, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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    More about this item

    Keywords

    GHG Quota; environmental policy instruments; fuel market; Germany;
    All these keywords.

    JEL classification:

    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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