Green Serves the Dirtiest. On the Interaction between Black and Green Quotas
AbstractTradable black (CO2) and green (renewables) quotas gain in popularity and stringency within climate policies of many OECD countries. The overlapping regulation through both instruments, however, may have important adverse economic implications. Based on stylized theoretical analysis and substantiated with numerical model simulations for the German electricity market, we show that a green quota imposed on top of a black quota does not only induce substantial excess cost but serves the dirtiest power technologies as compared to a black quota regime only.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 581.
Date of creation: Apr 2009
Date of revision:
Emissions Trading; Tradable Green Certificates; Overlapping Regulation;
Other versions of this item:
- Christoph Böhringer & Knut Einar Rosendahl, 2009. "Green Serves the Dirtiest: On the Interaction between Black and Green Quotas," CESifo Working Paper Series 2837, CESifo Group Munich.
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-25 (All new papers)
- NEP-CMP-2009-04-25 (Computational Economics)
- NEP-ENE-2009-04-25 (Energy Economics)
- NEP-ENV-2009-04-25 (Environmental Economics)
- NEP-REG-2009-04-25 (Regulation)
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