As part of its climate strategy, the EU aims at increasing the share of electricity from renewable energy sources (RES-E) in overall electricity generation. Attaining this target poses a considerable challenge as the electricity sector is "locked" into a carbon-intensive system, which hampers the adoption of RES-E technologies. Electricity generation, transmission and distribution grids as well as storage and demand response are subject to important path dependences, which put existing, non-renewable energy sources at an advantage. This paper examines how an EU framework for RES-E support policies should be designed to facilitate a carbon lock-out. For this purpose, we specify the major technological, economic and institutional barriers to RES-E. For each of the barriers, a policy review is carried out which assesses the performance of existing policy instruments and identifies needs for reform. The review reveals several shortcomings: while policies targeting generation are widely in place, measures to address barriers associated with OPEN ACCESSEnergies 2012, 5 324 electricity grids, storage and demand are still in their infancy and have to be extended. Moreover, the implementation of policies has been fragmented across EU Member States. In this respect, national policies should be embedded into an integrated EU-wide planning of the RES-E system with overarching energy scenarios and partially harmonized policy rules.

External diseconomies of pollution, Cournot oligopoly, Cost uncertainty, D89, L13, Q58,

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in September 2013Abstract It is well established that adaptation and technological investment in each case may serve as a commitment device in international climate politics. This paper for the first time analyzes the combined impact of these two strategic variables on global mitigation within a noncooperative framework where countries either decide on mitigation before or after adaptation. By investment, which is assumed to be made in the first place due to its considerable lead time, countries commit to lower national contributions to the global public good of mitigation. We find that the sequencing of adaptation before mitigation reinforces this strategic effect of technological investments at least for sufficiently similar countries. As a consequence, the subgame-perfect equilibrium yields a globally lower level of mitigation and higher global costs of climate change when adaptation is decided before mitigation. Besides this theoretical contribution, the paper proposes some strategies to combat the unfortunate rush to adaptation which can be currently observed in climate politics.JEL classification: Q54, H41, H87, C72

With reference to the newly emerging climate finance architecture under the post-Kyoto framework, this paper argues that a stronger focus must be placed on how the funds are to be spent in the recipient countries according to different needs, an issue we call the 'mode of funding'. We make our points based on a noncooperative two-country framework in which an industrialized and a developing country decide on mitigation in the first stage and on adaptation in the second stage of the game. The funding instruments recently agreed upon in UN climate negotiations are modeled in a stylized manner that highlights their specific modes of funding, such as tying the industrialized countries' transfer payments to a reduction in the developing countries' potential or actual loss and damages, mitigation or adaptation costs. We show that the various modes of funding may give rise to strategic choices when it comes to the countries' mitigation efforts. Moreover, some such modes (compensation for actual loss and damages and for adaptation costs) fall short of two essential minimum requirements for enabling Pareto improvements for donor and recipient alike and thus cannot guarantee sustained voluntary funding. We also demonstrate that the presumed equivalence of sequencing the decision on mitigation before adaptation compared to deciding simultaneously on mitigation and adaptation does not hold if different modes of climate funding are considered.

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