Combining Policies for Renewable Energy: Is the Whole Less than the Sum of its Parts?
Resource for the Future Discussion Paper No. 10-19
41 Pages Posted: 17 Mar 2010
Date Written: March 12, 2010
Since the energy crisis in the 1970s and later the growing concern for climate change in the 1990s, policymakers at all levels of government and around the world have been enthusiastically supporting a wide range of incentive mechanisms for electricity from renewable energy sources (RES-E). Motivations range from energy security to environmental preservation to green jobs and innovation, and measures comprise an array of subsidies to mandates to emissions trading. But do these policies work together or at cross-purposes? To evaluate RES-E policies, one must understand how specific policy mechanisms interact with each other and under what conditions multiple policy levers are necessary. In this article, we review the recent environmental economics literature on the effectiveness of RES-E policies and the interactions between them, with a focus on the increasing use of tradable quotas for both emissions reduction and RES-E expansion.
Keywords: environment, technology, externality, policy, climate change, renewable energy
JEL Classification: Q21, Q28, Q48, O38
Suggested Citation: Suggested Citation