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European renewable energy policy at crossroads-Focus on electricity support mechanisms

Fouquet, Doerte and Johansson, Thomas B LU (2008) In Energy Policy 36(11). p.4079-4092
Abstract
The European Union has adopted targets for the expanded use of renewable energies (REs) as one mean to achieve improved energy security, reduced greenhouse gas (GHG) emissions, and improved competitiveness of the European economies. Realising that rapid expansion of RE will not happen in the energy market place, as it now exists, various support mechanisms are under consideration, most prominently these may be grouped into two major categories, tradable green certificates (TGC) and feed-in tariffs (FiT). Experiences from a number of countries in Europe suggest that FiT deliver larger and faster penetration of RE than TGC, at lower cost. The two major systems are compared in overall terms. In a TGC system, a target for RE penetration is set... (More)
The European Union has adopted targets for the expanded use of renewable energies (REs) as one mean to achieve improved energy security, reduced greenhouse gas (GHG) emissions, and improved competitiveness of the European economies. Realising that rapid expansion of RE will not happen in the energy market place, as it now exists, various support mechanisms are under consideration, most prominently these may be grouped into two major categories, tradable green certificates (TGC) and feed-in tariffs (FiT). Experiences from a number of countries in Europe suggest that FiT deliver larger and faster penetration of RE than TGC, at lower cost. The two major systems are compared in overall terms. In a TGC system, a target for RE penetration is set by public authorities seeking to minimise cost for achieving this target. The certificate price is set by the market. In a FiT system, public authorities set an effective price but are not limiting the quantity installed. This has led to impressive growth rates, particularly in Denmark, Germany, and Spain. It is found that investor risks are much lower in a FiT system, and that innovation incentives are larger. Against this background, the European Commission proposal for an EU-wide TGC system is discussed. It is found that such a system is likely to be less effective and less efficient than maintaining national FiT systems, and that it also risks time-consuming legal processes during which investor uncertainties would risk a marked slow-down in investments. Given the underlying objective of addressing security, climate change and competitiveness, it therefore appears that, at least for the time being, continued reliance on national systems, especially FiT would be preferred. (C) 2008 Elsevier Ltd. All rights reserved. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Europe, Renewables, Energy
in
Energy Policy
volume
36
issue
11
pages
4079 - 4092
publisher
Elsevier
external identifiers
  • wos:000261020100008
  • scopus:53249090080
ISSN
1873-6777
DOI
10.1016/j.enpol.2008.06.023
language
English
LU publication?
yes
id
c2db5e0b-a742-4dc1-9ebe-13004983c6b0 (old id 1308755)
date added to LUP
2009-03-19 08:37:57
date last changed
2017-10-01 04:12:39
@article{c2db5e0b-a742-4dc1-9ebe-13004983c6b0,
  abstract     = {The European Union has adopted targets for the expanded use of renewable energies (REs) as one mean to achieve improved energy security, reduced greenhouse gas (GHG) emissions, and improved competitiveness of the European economies. Realising that rapid expansion of RE will not happen in the energy market place, as it now exists, various support mechanisms are under consideration, most prominently these may be grouped into two major categories, tradable green certificates (TGC) and feed-in tariffs (FiT). Experiences from a number of countries in Europe suggest that FiT deliver larger and faster penetration of RE than TGC, at lower cost. The two major systems are compared in overall terms. In a TGC system, a target for RE penetration is set by public authorities seeking to minimise cost for achieving this target. The certificate price is set by the market. In a FiT system, public authorities set an effective price but are not limiting the quantity installed. This has led to impressive growth rates, particularly in Denmark, Germany, and Spain. It is found that investor risks are much lower in a FiT system, and that innovation incentives are larger. Against this background, the European Commission proposal for an EU-wide TGC system is discussed. It is found that such a system is likely to be less effective and less efficient than maintaining national FiT systems, and that it also risks time-consuming legal processes during which investor uncertainties would risk a marked slow-down in investments. Given the underlying objective of addressing security, climate change and competitiveness, it therefore appears that, at least for the time being, continued reliance on national systems, especially FiT would be preferred. (C) 2008 Elsevier Ltd. All rights reserved.},
  author       = {Fouquet, Doerte and Johansson, Thomas B},
  issn         = {1873-6777},
  keyword      = {Europe,Renewables,Energy},
  language     = {eng},
  number       = {11},
  pages        = {4079--4092},
  publisher    = {Elsevier},
  series       = {Energy Policy},
  title        = {European renewable energy policy at crossroads-Focus on electricity support mechanisms},
  url          = {http://dx.doi.org/10.1016/j.enpol.2008.06.023},
  volume       = {36},
  year         = {2008},
}