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Green Tradable Certificates versus Feed-in Tariffs in the Promotion of Renewable Energy Shares

Author

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  • Till Requate

Abstract

The paper analyzes the relationship between CO2 mitigation policy and promotion policies designed to deploy renewable energy sources for electricity production (RES-E). If an emission cap is the only policy target, an optimal mix consisting of high and low carbon use of fossil fuels, deployment of RES-E, and energy savings can best be achieved by either setting a uniform carbon tax or by implementing a cap-and-trade system covering all CO2 sources. An additional RES-E share target causes higher costs in achieving the cap. Conversely, a more ambitious emission target automatically increases the RES-E share. In a second step we investigate different policies for inducing an RES-E quota. Such a quota can be efficiently achieved either by a system of tradable green certificates or by a budget-balancing premium system. A budget-balancing FIT system, by contrast, is not efficient, since it generates excessive fiscal distortion. We also show that differentiated, technology-specific FITs are even more inefficient.

Suggested Citation

  • Till Requate, 2014. "Green Tradable Certificates versus Feed-in Tariffs in the Promotion of Renewable Energy Shares," CESifo Working Paper Series 5149, CESifo.
    • Handle: RePEc:ces:ceswps:_5149
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    Cited by:

    1. Zhang, Shuo & Xu, Zhenhao & Li, Yingzi & Zhang, Jiayuan & Hu, Jiang, 2025. "System dynamics simulation model of price transmission in collaboration market of electricity, carbon, and green certificate driven by multiple policies," Energy, Elsevier, vol. 323(C).
    2. Alberto Biancardi, 2021. "Un nuovo ruolo per consumatori, imprese e finanza nella regolazione dei settori energia-clima," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2021(3), pages 129-158.
    3. Simmler, Martin & Haan, Peter, 2015. "On the incidence of renewable energy subsidies into land prices - Evidence from Germany," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112950, Verein für Socialpolitik / German Economic Association.
    4. Neerunjun, Nandeeta & Stahn, Hubert, 2025. "Renewable energy support: Pre-announced policies and efficiency," Energy Economics, Elsevier, vol. 150(C).
    5. Ángela García-Alaminos & Santiago J. Rubio, 2021. "Emission taxes and feed-in subsidies in the regulation of a polluting monopoly," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(2), pages 255-279, June.
    6. Peter Haan & Martin Simmler, 2016. "Wind Electricity Subsidies = Windfall Gains for Land Owners? Evidence from Feed-In Tariff in Germany," Discussion Papers of DIW Berlin 1568, DIW Berlin, German Institute for Economic Research.
    7. Paul Lehmann & Jos Sijm & Erik Gawel & Sebastian Strunz & Unnada Chewpreecha & Jean-Francois Mercure & Hector Pollitt, 2019. "Addressing multiple externalities from electricity generation: a case for EU renewable energy policy beyond 2020?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(2), pages 255-283, April.
    8. Omid Sabbaghi & Navid Sabbaghi, 2017. "The Chicago Climate Exchange and market efficiency: an empirical analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(4), pages 711-734, October.
    9. Currier, Kevin M. & Rassouli-Currier, Susanne, 2018. "Producer incentives in electricity markets with green quotas and tradable certificates," Utilities Policy, Elsevier, vol. 55(C), pages 59-68.
    10. Bigerna, Simona & D'Errico, Maria Chiara & Polinori, Paolo, 2020. "Heterogeneous impacts of regulatory policy stringency on the EU electricity Industry:A Bayesian shrinkage dynamic analysis," Energy Policy, Elsevier, vol. 142(C).
    11. Li, Li & Wang, Shuai & Wu, Jiaqi & Sun, Zhenqing, 2024. "Exploring the efficacy of renewable energy support policies in uncertain environments: A real options analysis," Energy Economics, Elsevier, vol. 132(C).
    12. Germeshausen, Robert, 2016. "Effects of Attribute-Based Regulation on Technology Adoption - The Case of Feed-In Tariffs for Solar Photovoltaic," VfS Annual Conference 2016 (Augsburg): Demographic Change 145712, Verein für Socialpolitik / German Economic Association.
    13. Chen, Wei & Luo, Jingjing & Govindan, Kannan & Bai, Chunguang & Quayson, Matthew, 2024. "Impact of carbon quota policy on clean energy investment strategies with financial constraints," International Journal of Production Economics, Elsevier, vol. 277(C).
    14. Haan, Peter & Simmler, Martin, 2018. "Wind electricity subsidies — A windfall for landowners? Evidence from a feed-in tariff in Germany," Journal of Public Economics, Elsevier, vol. 159(C), pages 16-32.
    15. Azra Senturk & Mustafa Ozcan, 2025. "Turkey's national renewable energy certificate system: a comparative assessment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(3), pages 7919-7947, March.
    16. Narita, Daiju & Requate, Till, 2021. "Price vs. quantity regulation of volatile energy supply and market entry of RES-E operators," Energy Economics, Elsevier, vol. 101(C).
    17. Fischer, Carolyn & Hübler, Michael & Schenker, Oliver, 2021. "More birds than stones – A framework for second-best energy and climate policy adjustments," Journal of Public Economics, Elsevier, vol. 203(C).
    18. Beck, Marisa & Rivers, Nicholas & Wigle, Randall, 2018. "How do learning externalities influence the evaluation of Ontario's renewables support policies?," Energy Policy, Elsevier, vol. 117(C), pages 86-99.
    19. Serkan ÇINAR & Mine YILMAZER, 2021. "Determinants of Green Technologies in Developing Countries," Isletme ve Iktisat Calismalari Dergisi, Econjournals, vol. 9(2), pages 155-167.
    20. Federico Boffa, Stefano Clò, and Alessio D'Amato, 2016. "Investment in Renewables under Uncertainty: Fitting a Feed-in Scheme into ETS," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).

    More about this item

    Keywords

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    JEL classification:

    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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