Scandinavian Working Papers in Economics
Discussion Papers,
Statistics Norway, Research Department
No 581: Green Serves the Dirtiest. On the Interaction between Black and Green Quotas
Christoph Böhringer and Knut Einar Rosendahl ()
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Knut Einar Rosendahl: Statistics Norway
Abstract: Tradable black (CO2) and green (renewables) quotas gain in popularity and stringency within climate policies of many OECD countries. The overlapping regulation through both instruments, however, may have important adverse economic implications. Based on stylized theoretical analysis and substantiated with numerical model simulations for the German electricity market, we show that a green quota imposed on top of a black quota does not only induce substantial excess cost but serves the dirtiest power technologies as compared to a black quota regime only.
Keywords: Emissions Trading; Tradable Green Certificates; Overlapping Regulation
JEL-codes: D61; H21; H22; Q58 April 2009
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