Carbon Abatement with Renewables: Evaluating Wind and Solar Subsidies in Germany and Spain

Abrell, Jan; Kosch, Mirjam

doi:10.2139/ssrn.3313637

Cited by 15 publications

(22 citation statements)

References 26 publications

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“…The differences between output and emissions leakage in Germany and Spain suggest that the marginal unit of output reduction in Germany is approximately 50% more carbon intensive than the marginal reduction for its trading partners; for Spain the emissions intensity of these marginal units are about equal. Abrell et al (2019), Table 3, shows that the German power mix is indeed dirtier than Spain's.…”

Section: Supply-increasing Policiesmentioning

confidence: 97%

“…Germany and Spain have adopted some of the world's most ambitious incentives for wind and solar energy, which include feed-in tariffs and market premium programs. Abrell et al (2019) find associated output and emissions leakage rates that are negative as a result of reduced imports through depressed wholesale prices. In their Table 3, they report d(import quantity)/d(policy) and d(domestic quantity)/d(policy), from which we calculate output leakage as -78%, -77%, -7% and -21% for German wind, German solar, Spanish wind and Spanish solar, respectively.…”

Section: Supply-increasing Policiesmentioning

confidence: 99%

“…Unilateral renewable support schemes fit our definition of supply-increasing policies. Abrell et al (2019) estimate negative carbon leakage as zero-carbon energy offsets imported gas-and coal-fired electricity in Germany (L = −0.50) and Spain (L = −0.12). Similarly, a German government report finds L = −0.65 (Klobasa and Sensfuss, 2016).…”

Section: Overlapping Policies In the Eu Etsmentioning

confidence: 99%

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Overlapping Climate Policies

Perino¹,

Ritz²,

Benthem³

2019

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We present an integrated framework to understand the emissions impact of unilateral overlapping policies within a carbon-pricing system. \Internal carbon leak-age" captures emissions displacement within the system (e.g., due to greater product imports from a neighbouring country). The waterbed effect captures the policy's interaction with the system's overall emissions cap. Current market rules in the reformed EU ETS, California's carbon market and RGGI feature \punctured" waterbeds that allow overlapping policies to affect aggregate emissions. We present simple formulae to estimate internal carbon leakage for different types of policy such as a carbon price floor (perhaps with a border tax adjustment), an energy efficiency program, and renewables support. The sign and magnitude of the climate benefit from an overlapping policy varies widely depending on its design, location and timing. Punctured waterbeds raise the stakes: well-designed overlapping policies can be much more climate-effective but others now backfire. Cambridge Working Papers in Economics Faculty of Economics www.eprg.group.cam.ac.uk

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Section: Supply-increasing Policiesmentioning

confidence: 97%

Section: Supply-increasing Policiesmentioning

confidence: 99%

Section: Overlapping Policies In the Eu Etsmentioning

confidence: 99%

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Overlapping Climate Policies

Perino¹,

Ritz²,

Benthem³

2019

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“…Abrell et al (2019b) consider the environmental value and market value of different renewables and define an environmental motive for differentiating subsidies by technology, while Fell and Linn (2013) and Wibulpolprasert (2016) investigate the impact of resource heterogeneity on cost-effectiveness of different abatement policies. Empirical studies like Abrell et al (2019a) evaluate different market values and environmental values of RE sources ex-post. While these studies highlight the need for improved policy design to incorporate external effects at the system or market level, they focus on CO 2 emissions but abstract from storage investments and the issue of the cost of integrating volatile RE supply for decarbonizing the electricity sector.…”

Section: Introductionmentioning

confidence: 99%

Buffering Volatility: Storage Investments and Technology-Specific Renewable Energy Support

Abrell

Streitberger

2019

SSRN Journal

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Mitigating climate change will require integrating large amounts of highly intermittent renewable energy (RE) sources in future electricity markets. Considerable uncertainties exist about the cost and availability of future large-scale storage to alleviate the potential mismatch between demand and supply. This paper examines the suitability of regulatory (public policy) mechanisms for coping with the volatility induced by intermittent RE sources, using a numerical equilibrium model of a future wholesale electricity market. We find that the optimal RE subsidies are technology-specific reflecting the heterogeneous value for system integration. Differentiated RE subsidies reduce the curtailment of excess production, thereby preventing costly investments in energy storage. Using a simple cost-benefit framework, we show that a smart design of RE support policies significantly reduces the level of optimal storage. We further find that the marginal benefits of storage rapidly decrease for short-term (intra-day) storage and are small for long-term (seasonal) storage independent of the storage level. This suggests that storage is not likely to be the limiting factor for decarbonizing the electricity sector.

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“…Our work is related to the literature that quantifies the value of the marginal output from RES (Callaway et al [2018]), the value of displaced emissions in electricity markets using the exogeneity of wind and solar output (Abrell et al [2019a], Cullen [2013], Novan [2015]), and the costs from the fluctuations in ancillary services due to RES expansions (Tangeras and Wolak [2019]). Our reallocation counterfactuals have similarities to those in Asker et al…”

Section: Introductionmentioning

confidence: 99%

(Mis)allocation of Renewable Energy Sources

Lamp

Samano

2020

SSRN Journal

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Policies to incentivize the adoption of renewable energy sources (RES) usually offer little flexibility to adapt to heterogeneous benefits across locations. We evaluate the geographical misallocation of RES associated with the uniform nature of subsidies. We estimate the dispersion of marginal benefits from solar production in Germany and compute the social and private benefits from optimal reallocations of residential solar installations keeping total capacity fixed. We find that total value of solar would increase by 6.4% relative to the current allocation using conservative values for solar penetration. Reallocating all solar and taking into account transmission would yield considerably larger gains.

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Carbon Abatement with Renewables: Evaluating Wind and Solar Subsidies in Germany and Spain

Cited by 15 publications

References 26 publications

Overlapping Climate Policies

Overlapping Climate Policies

Buffering Volatility: Storage Investments and Technology-Specific Renewable Energy Support

(Mis)allocation of Renewable Energy Sources

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