Renewable energy subsidies : Second-best policy or fatal aberration for mitigation ?

  title={Renewable energy subsidies : Second-best policy or fatal aberration for mitigation ?},
  author={Matthias Kalkuhl and Ottmar Edenhofer and Kai Lessmann},
This paper evaluates the consequences of renewable energy policies on welfare and energy prices in a world where carbon pricing is imperfect and the regulator seeks to limit emissions to a (cumulative) target. The imperfectness of the carbon price is motivated by political concerns regarding distributional effects of increased energy prices. Hence, carbon prices are considered to be temporarily or permanently absent or endogenously constrained by their effect on energy prices. We use a global… CONTINUE READING


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