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Integratation of Tradable Green Certificate Markets: What can be expected?

  • Amundsen, Eirik S.
  • Nese, Gjermund
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    Recently, many countries have introduced systems of tradable green certificates (TGCs) in order to increase the proportion of their electricity supply obtained from renewable sources. The main objective of this paper is to investigate the analytics of a TGC system of the Nordic type when integrated within several countries and to determine what can be expected from the system when applied in a real world setting. Both an analytical and a partial equilibrium version of the model are applied. In particular, we ask whether it is possible to derive analytically clear cut results with respect to how the system affects generation of electricity from renewable resources, and from carbon emitting resources, in the same way as it is possible for other known policy instruments such as an emission permit system or a plain carbon emission tax. A key result is that TGCs may be an imprecise instrument for regulating the generation of green electricity and that the combination of TGCs with a system of tradable emission permits may yield outcomes contrary to the intended purpose.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10628.

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    Date of creation: 2006
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    Handle: RePEc:pra:mprapa:10628
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    1. 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.
    2. Jensen, Stine Grenaa & Skytte, Klaus, 2003. "Simultaneous attainment of energy goals by means of green certificates and emission permits," Energy Policy, Elsevier, vol. 31(1), pages 63-71, January.
    3. Torstein Bye, 2003. "On the Price and Volume Effects from Green Certificates in the Energy Market," Discussion Papers 351, Statistics Norway, Research Department.
    4. Dominique Finon & Philippe Menanteau, 2003. "The Static and Dynamic Efficiency of Instruments of Promotion of Renewables," Post-Print halshs-00001300, HAL.
    5. Amundsen, Eirik S. & Baldursson, Fridrik M. & Mortensen, Jørgen Birk, 2003. "Price Volatility and Banking in Green Certificate Markets," Working Papers in Economics 02/03, University of Bergen, Department of Economics.
    6. Butler, L. & Neuhoff, K., 2005. "Comparison of Feed in Tariff, Quota and Auction Mechanisms to Support Wind Power Development," Cambridge Working Papers in Economics 0503, Faculty of Economics, University of Cambridge.
    7. 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.
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