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Green promotes the dirtiest: on the interaction between black and green quotas in energy markets

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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 unintended consequences. Based on theoretical analysis we show that a green quota imposed on top of a black quota promotes power production by the dirtiest technologies as compared to a black quota regime only.

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Authors and Affiliations

  1. Department of Economics and Centre for European Economic Research (ZEW), University of Oldenburg, Oldenburg, Germany

    Christoph Böhringer

  2. Research Department, Statistics Norway, Oslo, Norway

    Knut Einar Rosendahl

Authors
  1. Christoph Böhringer
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  2. Knut Einar Rosendahl
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Correspondence to Christoph Böhringer.

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Böhringer, C., Rosendahl, K.E. Green promotes the dirtiest: on the interaction between black and green quotas in energy markets. J Regul Econ 37, 316–325 (2010). https://doi.org/10.1007/s11149-010-9116-1

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  • DOI: https://doi.org/10.1007/s11149-010-9116-1

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