Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176945
Authors: 
Amundsen, Eirik S.
Andersen, Peder
Mortensen, Jørgen Birk
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 6926
Abstract: 
Instruments chosen to pursue climate related targets are not always efficient. In this paper we consider an economy with three climate related targets for its electricity generation: a given share of “green” electricity, a given expansion of “green” electricity, and a given reduction of “black” (fossil based) electricity. At its disposal the country has three instruments: an allowance system (tradable green certificates), a subsidy system (feed-in tariffs) and a Pigouvian fossil tax. Each of these instruments may be used to attain any of the given targets. Within the setting of the model it is verified that each kind of the target has only a single efficient instrument under certainty, and that there is a deadweight loss of using other instruments to achieve the target. Similarly, there is also an analysis of instrument choice when several targets are to be attained at the same time. The paper also discusses the case of simultaneous targets as well as the relevance of the various targets.
Subjects: 
energy policy
green certificates
subsidies
Pigouvian taxes
climate change
JEL: 
C70
Q28
Q42
Q48
Document Type: 
Working Paper

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