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Do Renewable Energy Policies Reduce Carbon Emissions? On Caps and Intra-Jurisdictional Leakage

Listed author(s):
  • Perino, Grischa
  • Jarke, Johannes

Climate policies overlapping a cap-and-trade scheme are generally considered not to change domestic emissions. In a two-sector general equilibrium model where only one sector is covered by a cap, we find that such policies do have a net impact on carbon emissions through inter-sectoral leakage. Promotion of renewable energy reduces emissions if tax-funded, but can increase emissions if funded by a levy on electricity. Replacing fossil fuels by electricity in uncapped sectors (e.g. power-to-heat or electric cars) and increases in the efficiency of electricity use reduce domestic emissions. Moreover, the commonly used measure to assess renewable energy policies is biased.

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File URL: https://www.econstor.eu/bitstream/10419/113007/1/VfS_2015_pid_237.pdf
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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2015 (Muenster): Economic Development - Theory and Policy with number 113007.

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Date of creation: 2015
Handle: RePEc:zbw:vfsc15:113007
Contact details of provider: Web page: http://www.socialpolitik.org/
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