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Title:Interaction of carbon reduction and green energy promotion in a small fossil-fuel importing economy PDF Logo
Authors:Pethig, Rüdiger
Wittlich, Christian
Issue Date:2009
Series/Report no.:Volkswirtschaftliche Diskussionsbeiträge // Universität Siegen, Fachbereich Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht 131
Abstract:We study the incidence of carbon-reduction and green-energy promotion policies in a general equilibrium small open economy that depends on imports of fossil fuels. The focus is on mixed policies that are either price based (emissions taxes and producer price subsidies for green energy) or quantity based (schemes of trading emissions and green certificates). Policy instruments directed head-on toward promoting green energy are shown to also reduce carbon emissions and vice versa but the direct effects are stronger than the side effects, the more so, the greater is the elasticity of substitution in consumption between energy and consumption goods. We calculate the effects of variations in individual policy parameters on all endogenous variables, among them the energy price and the welfare costs. We also determine the impact of exogenous fossil-fuel price shocks on the economy.
Subjects:carbon reduction
green energy promotion
policy mix
interaction of policies
JEL:Q42
Q43
Q48
Q54
Document Type:Working Paper
Appears in Collections:Volkswirtschaftliche Diskussionsbeiträge, Universität Siegen

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