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Multiple instruments to change energy behaviour: The emperor's new clothes?

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Over the last few decades, several instruments have evolved to deal with similar energy and environmental challenges. For instance, the economic literature prescribes separate tax or cap-and-trade systems to internalize negative environmental externalities and subsidies to internalize positive externalities such as R&D. However, policy is not straightforward because of the influence on cost and competition and concerns for regional employment, economic activity within certain industries, and any distributional effects. Tax discrimination, subsidies and regulations then undermine the efficiency of energy instruments. To balance any environmental concerns, other instruments, including green and white certificates, have been created. While innovative, these work as simple combinations of taxes and subsidies. While the extant literature thoroughly analyzes the partial effects of these instruments, there has been little focus on their basics and the effects of aggregate taxes and subsidies. This complexity calls for research on the efficiency of each instrument, including the administration and transaction costs associated with holding a large set of instruments. We should consider the coordination and simplification of policy tools before complicating the system further by introducing new, primarily equivalent, instruments.

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  • Torstein Bye & Annegrete Bruvoll, 2008. "Multiple instruments to change energy behaviour: The emperor's new clothes?," Discussion Papers 549, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:549
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    Cited by:

    1. Dobroschke, Stephan, 2012. "Energieeffizienzpotenziale und staatlicher Lenkungsbedarf," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 12-1, University of Cologne, FiFo Institute for Public Economics.
    2. Bor, Yunchang Jeffrey & Huang, Yophy, 2010. "Energy taxation and the double dividend effect in Taiwan's energy conservation policy--an empirical study using a computable general equilibrium model," Energy Policy, Elsevier, vol. 38(5), pages 2086-2100, May.
    3. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, July.
    4. Louis-Gaëtan Giraudet & Dominique Finon, 2011. "White certificate schemes : the static and dynamic efficiency of an adaptive policy instrument," Working Papers hal-00866422, HAL.
    5. Louis-Gaetan Giraudet and Dominique Finon, 2015. "European experiences with white certifirecate obligations: A critical review of existing evaluations," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    6. Annegrete Bruvoll, 2009. "On the measurement of environmental taxes," Discussion Papers 599, Statistics Norway, Research Department.
    7. Katja Biedenkopf, 2012. "Emissions Trading - A Transatlantic Journey for an Idea?," KFG Working Papers p0045, Free University Berlin.
    8. Lavecchia, Luciano & Stagnaro, Carlo, 2010. "Are Green Jobs Real Jobs? The Case of Italy," MPRA Paper 49472, University Library of Munich, Germany.
    9. Louis-Gaëtan Giraudet & Dominique Finon, 2011. "White certificate schemes : the static and dynamic efficiency of an adaptive policy instrument," CIRED Working Papers hal-00866422, HAL.
    10. Rüdiger Pethig & Christian Wittlich, 2009. "Interaction of Carbon Reduction and Green Energy Promotion in a Small Fossil-Fuel Importing Economy," CESifo Working Paper Series 2749, CESifo Group Munich.
    11. Louis-Gaëtan Giraudet & D. Finon, 2014. "European experiences with white certificate obligations: A critical review of existing evaluations," CIRED Working Papers hal-01016110, HAL.
    12. Merrill, Ryan & Sintov, Nicole, 2016. "An Affinity-to-Commons Model of Public Support For Environmental Energy Policy," Energy Policy, Elsevier, vol. 99(C), pages 88-99.
    13. V., Oikonomou & A., Flamos & S., Grafakos, 2010. "Is blending of energy and climate policy instruments always desirable?," Energy Policy, Elsevier, vol. 38(8), pages 4186-4195, August.
    14. Annegrete Bruvoll & Hanne Marit Dalen & Bodil M.Larsen, 2012. "Political motives in climate and energy policy," Discussion Papers 721, Statistics Norway, Research Department.

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    Keywords

    energy instruments; taxes; subsidies; green certificates; white certificates; carbon taxes;

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