Template-Type: ReDIF-Article 1.0
Author-Name:  Jongmin Yu and Hyo-Sun Kim
Title:  Internal Carbon Financing with Transferable Offsets from Renewable Portfolio Standard
Classification-JEL: F0
Pages:  31-52
Volume:  Volume 42
Issue:  Number 2
Year:  2021
Abstract:  Power generation under the Renewable Portfolio Standard (RPS) can reduce greenhouse gas emissions below the baseline level, so entities may argue to use this attribute to meet the goal of Emission Trading Scheme (ETS). Although these two quantity-based regulation systems have different policy objectives, both mechanisms are implicitly linked by credit conversions depending on credit prices. This paper builds an analytic partial equilibrium model and derives market equilibria in a closed form to demonstrate how each mechanism influences the other by policy instruments such as a renewable requirement, a reduction target in greenhouse gas emission, levels of penalties, or marginal costs. We can compare 'direct vs indirect' effectiveness of a regulatory changes across both markets with the case where converting renewable offsets are completed prohibited.
Handle: RePEc:aen:journl:ej42-2-Kim
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3626
File-Format: text/html
File-Restriction: Access to full text is restricted to IAEE members and subscribers.