Feed-in tariff and tradable green certificate in oligopoly
Feed-in tariff (FIT) and tradable green certificate (TGC) schemes are studied in a formal model and numerical example using the UK data. We find that if the markets were perfectly competitive, then feed-in tariff and the certificate price would be the same. However, when the markets are imperfect, they are generally different. While both the tariff and certificate price fluctuate around the difference between the costs of green and black energy, the tariff deviates more from the cost difference than the certificate price. The supplies of both black and green energy under FIT are higher than TGC, obviously as a result of subsidies. A troubling outcome is that the total energy supply increases under FIT as the renewables quota increases, which can negate other measures to mitigate climate changes such as demand management. Finally, using the data from the UK market, we find that social welfare under TGC is consistently higher than FIT for a wide range of values of the parameters.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Fristrup, Peter, 2003. "Some challenges related to introducing tradable green certificates," Energy Policy, Elsevier, vol. 31(1), pages 15-19, January.
- Morthorst, P. E., 2003. "A green certificate market combined with a liberalised power market," Energy Policy, Elsevier, vol. 31(13), pages 1393-1402, October.
- Klessmann, Corinna & Nabe, Christian & Burges, Karsten, 2008. "Pros and cons of exposing renewables to electricity market risks--A comparison of the market integration approaches in Germany, Spain, and the UK," Energy Policy, Elsevier, vol. 36(10), pages 3646-3661, October.
- Desiderio Romero-JordÃ¡n & JosÃ© FÃ©lix Sanz-Sanz, 2009. "Energy Taxes and Household Compliance with the Kyoto Protocol," Public Finance Review, , vol. 37(2), pages 142-169, March.
- Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
- Morthorst, P. E., 2003. "National environmental targets and international emission reduction instruments," Energy Policy, Elsevier, vol. 31(1), pages 73-83, January.
- Amundsen, Eirik S. & Mortensen, Jorgen Birk, 2001. "The Danish Green Certificate System: some simple analytical results," Energy Economics, Elsevier, vol. 23(5), pages 489-509, September.
- David M. Newbery, 1998.
"Competition, Contracts, and Entry in the Electricity Spot Market,"
RAND Journal of Economics,
The RAND Corporation, vol. 29(4), pages 726-749, Winter.
- Newbery, D. M., 1997. "Competition, Contracts and Entry in the Electricity Spot Market," Cambridge Working Papers in Economics 9707, Faculty of Economics, University of Cambridge.
- Amundsen, E.S. & Mortensen, J.B., 2001. "The Danish Green Certificate System: Some Simple Analytical Results," Norway; Department of Economics, University of Bergen 226, Department of Economics, University of Bergen.
- Dinica, Valentina & Arentsen, Maarten J., 2003. "Green certificate trading in the Netherlands in the prospect of the European electricity market," Energy Policy, Elsevier, vol. 31(7), pages 609-620, June.
- Zhou, Huizhong & Tamas, Meszaros Matyas, 2010. "Impacts of integration of production of black and green energy," Energy Economics, Elsevier, vol. 32(1), pages 220-226, January.
- Kosugi, Takanobu & Tokimatsu, Koji & Kurosawa, Atsushi & Itsubo, Norihiro & Yagita, Hiroshi & Sakagami, Masaji, 2009. "Internalization of the external costs of global environmental damage in an integrated assessment model," Energy Policy, Elsevier, vol. 37(7), pages 2664-2678, July. Full references (including those not matched with items on IDEAS)