Sustainability-guided promotion of renewable electricity generation

Madlener, Reinhard and Stagl, Sigrid (2005) Sustainability-guided promotion of renewable electricity generation. Ecological Economics, 53 (2). pp. 147-167. ISSN 0921-8009

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Abstract

In recent years, the threat of global climate change, high fuel import dependence, and rapidly rising electricity demand levels have intensified the quest for more sustainable energy systems. This in turn has increased the need for policy makers to promote electricity generation from renewable energy sources. Guaranteed prices coupled with a buy-back obligation for electricity fed into the grid is a popular renewables promotion instrument, especially in Europe. More recently, driven mainly by electricity market liberalisation efforts, quota targets for the share of renewables in combination with tradable ‘green’ certificates (TGC) have received considerable attention. TGC offer a greater theoretical potential for economic efficiency gains, due to price competition and the greater flexibility assigned to the obliged parties. While guaranteed prices and TGC schemes support the operation of renewable energy technology systems, bidding schemes for renewable energy generation capacity are used to raise economic efficiency on the plant construction side. All of these policy instruments suffer from the shortcoming that they do not explicitly account for the often widely varying environmental, social and economic impacts of the technologies concerned. In this paper, we propose a methodology for the design of renewable energy policy instruments that is based on integrated assessment. In particular, we argue that using participatory multicriteria evaluation as part of the design of renewable energy promotion policies would make it possible: (1) to differentiate the level of promotion in a systematic and transparent manner according to their socio-ecological economic impact, and (2) to explicitly account for the preferences of stakeholders. A further problem of existing TGC and bidding schemes is that diversity of supply could be severely diminished, if few low-cost technologies were allowed to dominate the renewable energy market. To ensure a certain diversity of technologies, our scheme suggests the use of different technology bands for technologies that are relatively homogeneous with respect to their maturity.

Item Type: Article
Additional Information: The paper takes the fashionable case for sustainability in electricity generation via guaranteed prices and `tradable green certificates¿, to argue for a methodology of multicriteria evaluation and diversity (in line with prevailing SPRU views) so that such policy instruments can adjust to heterogeneous environments and socioeconomic impacts.
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Depositing User: Sigrid Stagl
Date Deposited: 06 Feb 2012 18:36
Last Modified: 30 Mar 2012 16:19
URI: http://sro.sussex.ac.uk/id/eprint/17402
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