Multiple quota markets for renewable energy: Balancing efficiency and the risk of a technological lock-in
Project funded by own resources
Project title Multiple quota markets for renewable energy: Balancing efficiency and the risk of a technological lock-in
Principal Investigator(s) Krysiak, Frank Christian
Co-Investigator(s) Lechthaler-Felber, Giulia
Organisation / Research unit Departement Wirtschaftswissenschaften / Umweltökonomie (Krysiak)
Project start 01.01.2012
Probable end 31.12.2013
Status Completed
Abstract

To increase the share of renewables in energy supply, quota markets and feed-in tariffs are the most discussed (and used) instruments of environmental policy. They differ regarding their impact on technological progress. Whereas feed-in tariffs neutralize any competition between different technologies, only the currently best technologies survive in a quota market. From the perspective of technological progress, both instruments are suboptimal; quota markets easily result in a lock-in (only the currently best technology is used and developed, regardless of the potential of other technologies) and feed-in tariffs lead to a continued development of inferior technologies. In this project, we analyze a system of multiple quota markets (e.g., a markets for new and a market for more mature technologies) with regard to its potential of inducing an ex-ante efficent development of different technologies. To this end, we develop a new model of technological progress under uncertainty and analyze this system of multiple quota markets in the context of this model.

Keywords Renewable energy, tradable permits, technological progress, uncertainty
Financed by University funds
   

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