The interaction between emissions trading and renewable electricity support schemes. An overview of the literature

The public promotion of electricity from renewable energy sources coexists in many countries with the recent implementation of emissions trading schemes. As shown by several papers, this coexistence may lead to significant interactions between both instruments, in the form of synergies and conflicts. This paper provides an overview and analysis of the literature on such coexistence and interactions. A major conclusion is that policy measures aiming at exploiting the synergies between both instruments should be implemented. The greatest synergy effects from the use of both instruments take place through appropriate coordination of their targets. Another key finding is that, although some stylised facts can be inferred from the studies, some results from those complex interactions are context-specific since they depend on the design of the instruments in particular countries. In spite of the significant policy implications of such interactions for the effective and cost-effective functioning of both instruments, this is a surprisingly under searched field. It is so concerning, both, theoretical and empirical analysis.

Pablo del Río GonzálezEmail: