Quotation Gugler, Klaus, Haxhimusa, Adurim, Liebensteiner, Mario. 2021. Effectiveness of climate policies: Carbon pricing vs. subsidizing renewables. Journal of Environmental Economics and Management. 106 102405


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Abstract

Most but not all economists view carbon pricing as most effective to combat carbon emissions, whereas other policies are widely applied and highly debated. We quantify the effectiveness of climate policies in the form of pricing carbon and subsidizing renewable energies for Germany's and Britain's power sectors. While Germany relies on heavy subsidies for renewables but on a weak price for carbon certificates (EUA) from the EU Emission Trading System (ETS), its emissions hardly declined. To underpin the low EUA price, Britain introduced a unilateral tax on power sector emissions, the Carbon Price Support (CPS). Within only five years, carbon emissions declined by 55%. Our results demonstrate that in the power sector, even a modest carbon price (∼€30/tCO2) can induce significant abatement at low costs within a short period as long as “cleaner” gas plants exist to replace “dirty” coal plants. We also find that carbon pricing is superior to subsidizing wind or solar power in these two countries.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Environmental Economics and Management
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-B, WH-B
Language English
Title Effectiveness of climate policies: Carbon pricing vs. subsidizing renewables
Volume 106
Year 2021
Page from 102405
Reviewed? Y
URL https://www.sciencedirect.com/science/article/pii/S0095069620301297?via%3Dihub
DOI https://doi.org/10.1016/j.jeem.2020.102406
Open Access Y
Open Access Link http://creativecommons.org/licenses/ by-nc-nd/4.0/
JEL L94 L98 Q35 Q38 Q54 Q58

Associations

People
Gugler, Klaus (Details)
External
Haxhimusa, Adurim (University of Applied Sciences of the Grisons, Centre for Economic Policy Research, Switzerland)
Liebensteiner, Mario (Friedrich-Alexander University (FAU), Germany)
Organization
Research Institute for Regulatory Economics FI (Details)
Department of Economics (Gugler) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5353 Environmental economics (Details)
5370 Industrial economics (Details)
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