Renewable energy policy in the presence of innovation: Does government pre-commitmnt matter?

Arbeitspapier

In a perfectly competitive market with a possibility of technological innovation we contrast guaranteed feed-in tariffs for electricity from renewables and tradable green certificates from a dynamic efficiency and social welfare point of view. Specifically, we model decisions about the technological innovation with convex costs within the framework of a game-theoretic model, and discuss implications for optimal policy design under different assumptions regarding regulatory pre-commitment. We find that for the case of technological innovation with convex costs subsidy policies are preferable over quota-based policies. Further, in terms of dynamic efficiency, no pre-commitment policies are shown to be at least as good as the pre-commitment ones. Thus, a government with a preference for innovation being performed if the achievable cost reduction is high should be in favor of the no pre-commitment regime.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1010

Classification and Topics

• Classification: Wirtschaft ; Alternative Energy Sources ; Energy: Government Policy
• Subject: Renewable electricity ; Feed-in tariffs ; Regulatory pre-commitment ; Tradable green certificates ; Quota target ; Innovation ; Energy policy ; Erneuerbare Energie ; Emissionshandel ; Quotenregulierung ; Technischer Fortschritt ; Förderung erneuerbarer Energien ; Regulierungstheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Madlener, Reinhard ; Neustadt, Ilja
• Event: Veröffentlichung
• (who): University of Zurich, Socioeconomic Institute
• (where): Zurich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/76121
• Last update: 10.03.2025, 11:44 AM CET