Journal
ENERGY POLICY
Volume 39, Issue 7, Pages 3966-3974Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2011.01.030
Keywords
Renewable portfolio standard; Emission trading; Power market
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Emission trading programs (C&T) and renewable portfolio standards (RPS) are two common tools used by policymakers to control GHG emissions in the energy and other energy-intensive sectors. Little is known, however, as to the policy implications resulting from these concurrent regulations, especially given that their underlying policy goals and regulatory schemes are distinct. This paper applies both an analytical model and a computational model to examine the short-run implications of market interactions and policy redundancy. The analytical model is used to generate contestable hypotheses, while the numerical model is applied to consider more realistic market conditions. We have two central findings. First, lowering the CO(2) C&T cap might penalize renewable units, and increasing the RPS level could sometimes benefit coal and oil and make natural gas units worse off. Second, making one policy more stringent would weaken the market incentive, which the other policy relies upon to attain its intended policy target. (C) 2011 Elsevier Ltd. All rights reserved.
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