Climate Policy with the Chequebook – An Economic Analysis of Climate Investment Support
Across the globe, climate policy is increasingly using investment support instruments, such as grants, concessional loans, and guarantees – whereas carbon prices are losing importance. This development substantially increases the risk of inefficient public spending. In this paper, we examine the ability of finance instruments to effectively and efficiently address market failures related to clean…
Symposium on Energy Efficiency
The Impact of Behavioral Science Experiments on Energy Policy
One of the most exciting areas of research today is the use of experiments informed by behavioral science to understand how to change energy consumption decisions of consumers. This article provides a survey and synthesis of experiments and focuses on general principles that can be gleaned from these experiments to date. We identify four general…
Linking Emission Trading Schemes: A Short Note
In principle, linking emission trading schemes would favour the depletion of low-cost abatement opportunities that are geographically spread over the globe. However, this would only be possible if the price of the emission permits in the different schemes converge to one price. Using a simple model-free structure, the paper first assesses how a unilateral link…
Development and Application of Greenhouse Gas Performance Benchmarks in the European Union Emissions Trading Scheme
In the European Union Emissions Trading Scheme’s third trading period (2013-2020), the free allocation of emission allowances will be based on greenhouse gas performance benchmarks. This policy note describes how the revised rules were developed, how they will be applied in practice, and what they imply for operators of installations subject to the system. It…
Impacts of Biofuels Policies in the EU
Biofuels have the potential of playing an important role in the renewable energy sources panorama, ensuring the achievement of multiple goals such as security of supply, reduction of greenhouse gas (GHG) emissions, creation of green jobs, and development of business opportunities in the agricultural and rural sectors. Subsidies to the sector were justified on this…
Cost-effectiveness and Economic Incidence of a Clean Energy Standard
A Clean Energy Standard (CES) is a flexible, market-based policy instrument that could be adopted to reduce greenhouse gas emissions from the U.S. electricity system over time. This paper uses several well-known energy system and electricity models to analyze a CES that reflects broad principles outlined in President Obama’s January 2011 State of the Union…
German Nuclear Policy Reconsidered: Implications for the Electricity Market
In the aftermath of the nuclear catastrophe in Fukushima-Daiichi, German nuclear policy has been reconsidered. This paper demonstrates the economic effects of an accelerated nuclear phase-out in Germany on the European electricity market. An optimization model is used to analyze two scenarios with different lifetimes for nuclear plants in Germany (phase-out vs. prolongation). Based on…
Designing the European Gas Market: More Liquid & Less Natural?
Designing a gas market is defining how the commodity, the transmission and ancillary services are traded. The European Union has built the commoditization of natural gas through the socialization of several costs of trade. This choice aims at obtaining more liquid markets through the creation of virtual hubs of trade. These virtual hubs ignore most…