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CO2 Abatement from RES Injections in the German Electricity Sector: Does a CO2 Price Help?

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  • Ellerman, Danny
  • Delarue, Erik
  • Weigt, Hannes

Abstract

The overlapping impact of the Emission Trading System (ETS) and renewable energy (RE) deployment targets creates a classic case of interaction effects. Whereas the price interaction is widely recognized and has been thoroughly discussed, the effect of an overlapping instrument on the abatement attributable to an instrument has gained little attention. This paper estimates the actual reduction in demand for European Union Allowances that has occurred due to RE deployment focusing on the German electricity sector, for the five years 2006 through 2010. Based on a unit commitment model we estimate that CO2 emissions from the electricity sector are reduced by 33 to 57 Mtons, or 10% to 16% of what estimated emissions would have been without any RE policy. Furthermore, we find that the abatement attributable to RE injections is greater in the presence of an allowance price than otherwise. The same holds for the ETS effect in presence of RE injection. This interaction effect is consistently positive for the German electricity system, at least for these years, and on the order of 0.5% to 1.5% of emissions.

Suggested Citation

  • Ellerman, Danny & Delarue, Erik & Weigt, Hannes, 2012. "CO2 Abatement from RES Injections in the German Electricity Sector: Does a CO2 Price Help?," Working papers 2012/14, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2012/14
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    References listed on IDEAS

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    Cited by:

    1. Claudio Marcantonini & A. Denny Ellerman, 2014. "The Implicit Carbon Price of Renewable Energy. Incentives in Germany," RSCAS Working Papers 2014/28, European University Institute.
    2. Weigt, Hannes & Ellerman, Denny & Delarue, Erik, 2013. "CO2 abatement from renewables in the German electricity sector: Does a CO2 price help?," Energy Economics, Elsevier, vol. 40(S1), pages 149-158.
    3. Yao, Xilong & Liu, Yang & Qu, Shiyou, 2015. "When will wind energy achieve grid parity in China? – Connecting technological learning and climate finance," Applied Energy, Elsevier, vol. 160(C), pages 697-704.
    4. Anna Creti & Alena Kotelnikova & Guy Meunier & Jean-Pierre Ponssard, 2015. "A cost benefit analysis of fuel cell electric vehicles," Working Papers hal-01116997, HAL.
    5. Jan Abrell & Mirjam Kosch & Sebastian Rausch, 2017. "The Economic Cost of Carbon Abatement with Renewable Energy Policies," CER-ETH Economics working paper series 17/273, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. A. Denny Ellerman, 2014. "The Implicit Carbon Price of Renewable Energy. Incentives in Germany," EUI-RSCAS Working Papers p0376, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    7. Gawel, Erik & Strunz, Sebastian & Lehmann, Paul, 2014. "A public choice view on the climate and energy policy mix in the EU — How do the emissions trading scheme and support for renewable energies interact?," Energy Policy, Elsevier, vol. 64(C), pages 175-182.
    8. Claudio Marcantonini & Vanessa Valero, 2015. "Renewable Energy Incentives and CO2 Abatement in Italy," RSCAS Working Papers 2015/20, European University Institute.

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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