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A critical evaluation of the 2022 greenhouse gas mitigation quota in Germany from an environmental economics and policy perspective

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  • Liepold, Constanze
  • Fabianek, Paul
  • Madlener, Reinhard

Abstract

This study aims at identifying the strengths and weaknesses of the Greenhouse Gas Mitigation 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 for assessing cost effectiveness, Pareto efficiency, and dynamic incentive effects. The results show that the Greenhouse Gas Mitigation 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 Greenhouse Gas Mitigation Quota and to combine it systematically with other environmental economics policies such as a carbon tax.

Suggested Citation

  • Liepold, Constanze & Fabianek, Paul & Madlener, Reinhard, 2024. "A critical evaluation of the 2022 greenhouse gas mitigation quota in Germany from an environmental economics and policy perspective," Energy Policy, Elsevier, vol. 191(C).
    • Handle: RePEc:eee:enepol:v:191:y:2024:i:c:s0301421524002209
    DOI: 10.1016/j.enpol.2024.114200
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