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The no cost emission saving policy

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  • Jan Christian Schinke

Abstract

The EU is enthusiastically proposing climate saving policies that place Europe as the innovator in reducing emissions and increasing the share of renewable energy sources (RES). However, the application of suitable instruments appears to create problems with differences between the approaches that seek to achieve the objectives. The European Union Emissions Trading Scheme (EU-ETS) and national support regimes such as renewable energy feed-in tariffs (REFIT) in particular are often not well integrated. Whilst the first aim is to price carbon emissions, the second is to increase the market share of green energy, however coordination of the two is lacking. This paper analyses literature addressing the two instruments of EU-ETS and REFITs and shows how when jointly applied they can interact with one another. If interaction is possible, what potential to reduce emissions at a faster rate without increasing costs is created? The legal options in addition to economic efficiencies enable a new policy that can faster reach the ambitious climate saving goals of the EU. Market based trading emissions trading scheme and non-market based support regimes for renewable energy sources are linked to each other. What are the economical benefits?The effects of both instruments jointly implemented could have an enhancing effect if contemporaneous renewable energy sources (RES) support regimes would be accepted not as a cost intensive instrument, but as one that optimise inter-system conditions. The targeted support of selected technologies at selected places or regions would lead to cost-optimising use of spending, higher outputs and lower costs per unit. The quantification of the potential remains open at this point and requires deeper research. What can be mentioned is the missing pragmatism to calculate the full effects through RES capacities. The separation of conventional and RES source grid loads would be the first step for the future accreditation of unrealised intra-system emission reductions. It is an unpopular result for EU-ETS participants, especially from the energy sector, as they would lose their economic advantage, while the community and the environment would profit highly from additional carbon savings at zero costs. Ecologically, it would enable an enormous step forward in European climate saving policies.

Suggested Citation

  • Jan Christian Schinke, 2011. "The no cost emission saving policy," EcoMod2011 2958, EcoMod.
    • Handle: RePEc:ekd:002625:2958
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    References listed on IDEAS

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    1. Regina Betz & Misato Sato, 2006. "Emissions trading: lessons learnt from the 1st phase of the EU ETS and prospects for the 2nd phase," Climate Policy, Taylor & Francis Journals, vol. 6(4), pages 351-359, July.
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    3. Abrell, Jan & Weigt, Hannes, 2008. "The Interaction of Emissions Trading and Renewable Energy Promotion," MPRA Paper 65658, University Library of Munich, Germany.
    4. Alberola, Emilie & Chevallier, Julien & Cheze, Benoi^t, 2008. "Price drivers and structural breaks in European carbon prices 2005-2007," Energy Policy, Elsevier, vol. 36(2), pages 787-797, February.
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