Impacts of renewable electricity standard and Renewable Energy Certificates on renewable energy investments and carbon emissions

Accelerating the development of renewable energy is seen as an effective way for achieving the goals of carbon peak and carbon neutrality. The polices of Renewable Electricity Standard (RES) and Renewable Energy Certificates (REC) play increasing and important roles in developing renewable energy. In this paper, we develop an analytical model to analyze the impacts of the interaction of RES and REC polices on the renewable energy investment levels of an electricity generation firm and the carbon emissions. Our analysis reveals several interesting insights. First, we find that the green tags price under REC policy has a non-monotonic effect on the renewable energy investment, which highly depends on the quota (i.e., the required percentage of renewable electricity consumption on total electricity consumption) under the RES policy. Specifically, when the quota in RES policy is set too high, an increase in the green tags price will increase renewable energy investment; otherwise it will reduce the electricity generation firm's incentive to invest in renewable energy. Second, we show that the green tags price also has a non-monotonic effect on the carbon emissions. Specifically, when the quota in RES policy is set small enough, an increase in the green tags price will decrease the carbon emission. However, when the quota in RES policy is high enough, an increase in the green tags price will increase the carbon emission.

Automated summary

This paper analyzes the impacts of the interaction between Renewable Electricity Standard (RES) and Renewable Energy Certificates (REC) policies on renewable energy investment and carbon emissions. The study finds that the green tags price has a non-monotonic effect on renewable energy investment and carbon emissions, depending on the quota set in the RES policy.