Arbeitspapier
The Economic Cost of Carbon Abatement with Renewable Energy Policies
This paper exploits the randomness and exogeneity of weather conditions to identify the economic cost of decarbonization through renewable energy (RE) support policies. We find that both the aggregate cost and the distribution of cost between energy producers and consumers vary significantly depending on which type of RE technology is promoted reflecting substantial heterogeneity in production cost, temporal availability of natural resources, and market conditions (i.e., time-varying demand, carbon intensity of installed production capacities, and opportunities for cross-border trade). We estimate that the cost for reducing one ton of CO2 emissions through subsidies for solar are EUR 500-1870. Subsidizing wind entails significantly lower cost, which can even be slightly negative, ranging from EUR 5-230. While the economic rents for energy producers always decrease, consumers incur three to five times larger costs when solar is promoted but gain under RE policies promoting wind.
- Language
-
Englisch
- Bibliographic citation
-
Series: Economics Working Paper Series ; No. 17/273
- Classification
-
Wirtschaft
Renewable Resources and Conservation: Government Policy
Energy: Government Policy
Climate; Natural Disasters and Their Management; Global Warming
Electric Utilities
Econometrics
- Subject
-
Decarbonization
Renewable Energy Policies
Wind
Solar
Electricity
Economic Cost
Distributional impacts
- Event
-
Geistige Schöpfung
- (who)
-
Abrell, Jan
Kosch, Mirjam
Rausch, Sebastian
- Event
-
Veröffentlichung
- (who)
-
ETH Zurich, CER-ETH - Center of Economic Research
- (where)
-
Zurich
- (when)
-
2017
- DOI
-
doi:10.3929/ethz-b-000176290
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Abrell, Jan
- Kosch, Mirjam
- Rausch, Sebastian
- ETH Zurich, CER-ETH - Center of Economic Research
Time of origin
- 2017
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