Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101994
Authors: 
Fischer, Carolyn
Newell, Richard G.
Preonas, Louis
Year of Publication: 
2014
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 67.2014
Abstract: 
Myriad policy measures aim to reduce greenhouse gas emissions from the electricity sector, promote generation from renewable sources, and encourage energy conservation. To what extent do innovation and energy efficiency (EE) market failures justify additional interventions when a carbon price is in place? We extend the model of Fischer and Newell (2008) with advanced and conventional renewable energy technologies and short and long-run EE investments. We incorporate both knowledge spillovers and imperfections in the demand for energy efficiency. We conclude that some technology policies, particularly correcting R&D market failures, can be useful complements to emissions pricing, but ambitious renewable targets or subsidies seem unlikely to enhance welfare when placed alongside sufficient emissions pricing. The desirability of stringent EE policies is highly sensitive to the degree of undervaluation of EE by consumers, which also has implications for policies that tend to lower electricity prices Even with multiple market failures, emissions pricing remains the single most cost-effective option for reducing emissions
Subjects: 
Climate Change
Cap-and-Trade
Renewable Energy
Portfolio Standards
Subsidies
Spillovers
Energy Efficiency
Electricity
JEL: 
Q42
Q52
Q55
Q58
Document Type: 
Working Paper

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