Arbeitspapier

Optimal federal co-regulation of renewable energy deployment

In federal countries the allocation of renewable energy (RE) deployment is simultaneously regulated by national and subnational governments. We analyze the efficiency of federal coregulation when different types of policy instruments - price and quantity - are assigned to government levels. Using an analytical model with two regulatory levels, we specify conditions that ensure first-best allocation of RE deployment in equilibrium. These efficiency conditions refer to how the financial burden of the national RE support scheme should be shared among subnational jurisdictions. Under realistic assumptions national price-based regulation is efficient if burden shares are proportional to population shares, regardless of the subnational policy instrument. Contrary, under national quantity-based regulation efficiency conditions depend on the subnational policy instrument. While with subnational price-based regulation burden shares should be oriented towards first-best RE deployment shares, with subnational quantity-based regulation burden shares should be oriented towards population shares.

Language
Englisch

Bibliographic citation
Series: UFZ Discussion Paper ; No. 8/2020

Classification
Wirtschaft
Intergovernmental Relations; Federalism; Secession
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Energy: Government Policy
Market Design
Subject
multi-level governance
environmental regulation
renewable energies
tender scheme
feed-in tariff
spatial planning

Event
Geistige Schöpfung
(who)
Meier, Jan-Niklas
Lehmann, Paul
Event
Veröffentlichung
(who)
Helmholtz-Zentrum für Umweltforschung (UFZ)
(where)
Leipzig
(when)
2020

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Meier, Jan-Niklas
  • Lehmann, Paul
  • Helmholtz-Zentrum für Umweltforschung (UFZ)

Time of origin

  • 2020

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