Emissions Trading and Feed-In Tariffs: Do We Need Both?

When I started this blog some 3.5 years ago, the focus was on climate issues, particularly climate economics. More recently, however, I have neglected this topic a little. Fortunately, working at a research institute gives one the opportunity to learn a lot about things other scientists do–e.g., regarding the quite popular question whether the EU needs both emissions reduction and renewable energy deployment targets such as the 20-20-20 target. In other words: do we need an energy mix consisting, e.g., of emissions trading and feed-in tariff schemes? Or is emissions trading enough to reach policy goals? And, by the way, what are these goals? Continue reading

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Cap and Dividend

A few days ago I wrote a rather short post about the EU ETS (Emissions Trading System). It was a praise of the general idea of cap and trade schemes (and the EU’s one as a good example), although I mentioned two challenges remaining: inclusion of all industrial sectors in the scheme and agreement on a global system of interlinked national cap and trade schemes. But there is one more adding proposal worth mentioning: the so called “cap and dividend”. Continue reading

The Good Example of ETS

One of the most intensively discussed subjects in the economics of climate change is the question of what is the best way of pricing carbon. The most common (and the only one that has been implemented so far) proposal is cap and trade. The idea is simple: constrain the amount of emissions permitted and let market agents decide whether they want to buy permissions or invest in technologies causing less emissions instead. Continue reading