Simultaneous attainment of energy goals by means of green certificates and emission permits

We discuss the analytical effects of introducing emission permits and green certificates and the corresponding quotas as regulatory mechanisms to, respectively, reduce emissions from electricity production and ensure a certain deployment of renewable energy. The different case studies in this paper show that both instruments can be used in order to reach an emission goal or a goal of renewable energy. However, the combination of these instruments and the way they are used, is shown to be important for the price faced by consumers. It is shown that the effect on the consumer price is not an unambiguous increase with the introduction of a green quota. There is a choice between quotas leading to a lower consumer price and quotas leading to a higher consumer price. As a result of this it is shown that it is always optimal to reach a renewable energy deployment goal by the use of green certificates. However, to reach an emission goal it is sometimes most favourable, with respect to consumer prices, to use green certificates and sometimes to use emission permits. (C) 2002 Elsevier Science Ltd. All rights reserved.