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Multiple instruments to change energy behaviour: The emperor’s new clothes?

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Abstract

Over the last few decades, several instruments have evolved to deal with similar energy and environmental challenges. For instance, the economic literature prescribes separate tax or cap-and-trade systems to internalize negative environmental externalities and subsidies to internalize positive externalities such as R&D. However, policy is not straightforward because of the influence on cost and competition and concerns for regional employment, economic activity within certain industries, and any distributional effects. Tax discrimination, subsidies and regulations then undermine the efficiency of energy instruments. To balance any environmental concerns, other instruments, including green and white certificates, have been created. While innovative, these work as simple combinations of taxes and subsidies. While the extant literature thoroughly analyzes the partial effects of these instruments, there has been little focus on their basics and the effects of aggregate taxes and subsidies. This complexity calls for research on the efficiency of each instrument, including the administration and transaction costs associated with holding a large set of instruments. We should consider the coordination and simplification of policy tools before complicating the system further by introducing new, primarily equivalent, instruments.

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Bibliographic Info

Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 549.

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Date of creation: Jun 2008
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Handle: RePEc:ssb:dispap:549

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Keywords: energy instruments; taxes; subsidies; green certificates; white certificates; carbon taxes;

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References

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Citations

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Cited by:
  1. repec:hal:wpaper:hal-00866422 is not listed on IDEAS
  2. Annegrete Bruvoll & Hanne Marit Dalen & Bodil M.Larsen, 2012. "Political motives in climate and energy policy," Discussion Papers 721, Research Department of Statistics Norway.
  3. V., Oikonomou & A., Flamos & S., Grafakos, 2010. "Is blending of energy and climate policy instruments always desirable?," Energy Policy, Elsevier, vol. 38(8), pages 4186-4195, August.
  4. Dobroschke, Stephan, 2012. "Energieeffizienzpotenziale und staatlicher Lenkungsbedarf," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 12-1, University of Cologne, FiFo Institute for Public Economics.
  5. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, 07.
  6. Annegrete Bruvoll, 2009. "On the measurement of environmental taxes," Discussion Papers 599, Research Department of Statistics Norway.
  7. Rüdiger Pethig & Christian Wittlich, 2009. "Interaction of carbon reduction and green energy promotion in a small fossil-fuel importing economy," Volkswirtschaftliche Diskussionsbeiträge 131-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  8. Lavecchia, Luciano & Stagnaro, Carlo, 2010. "Are Green Jobs Real Jobs? The Case of Italy," MPRA Paper 49472, University Library of Munich, Germany.
  9. Katja Biedenkopf, 2012. "Emissions Trading - A Transatlantic Journey for an Idea?," KFG Working Papers p0045, Free University Berlin.
  10. repec:hal:ciredw:hal-00866422 is not listed on IDEAS

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