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Pros and cons of alternative policies aimed at promoting renewables

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  • Finon, Dominique

    () (Centre International de Recherche sur l'Environnement et le Developpement, France)

Abstract

Following a brief review of the rationale for promoting renewable energy sources, this paper compares alternative policies to promote the production of renewable electricity. The focus is on feed-in tariffs (used in Germany, Spain, and France - for instance) and tradable green certificate (TGC) systems (United Kingdom and Italy, for instance). Considering economic theory and practical experience, the criteria for comparing these two alternatives are: cost-effectiveness, environmental effectiveness, and compatibility with market liberalisation. The paper argues that economic theory does not suggest a clear-cut advantage of one instrument over the other and it emphasises that, in any event, the choice of instrument depends on the relative importance attached to these criteria and on cultural factors such as faith - or lack thereof - in markets to help solve environmental problems. In this context, the paper questions the practical usefulness of a European-wide TGC system.

Suggested Citation

  • Finon, Dominique, 2007. "Pros and cons of alternative policies aimed at promoting renewables," EIB Papers 11/2007, European Investment Bank, Economics Department.
  • Handle: RePEc:ris:eibpap:2007_011
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    Cited by:

    1. Joan Canton & Åsa Johannesson Lindén, 2010. "Support schemes for renewable electricity in the EU," European Economy - Economic Papers 2008 - 2015 408, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Verbruggen, Aviel, 2009. "Performance evaluation of renewable energy support policies, applied on Flanders' tradable certificates system," Energy Policy, Elsevier, vol. 37(4), pages 1385-1394, April.

    More about this item

    Keywords

    Renewable energy sources; feed-in tariffs; green certificates;

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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