Linking promotion strategies for RES-E and CO₂ reduction in a liberalised power market: Is a simultaneous policy necessary?

Three important issues with respect to the integration of different renewable energy sources into the liberalised European electricity market and the international condition of GHG-reduction will be investigated in this paper. First, it will be analysed how most important promotion schemes (feed-in tariffs, quota systems) for different renewable energy sources for electricity generation (RES -E) interact with the liberalised market. Second, the influence of the restriction of the greenhouse gas emissions on the electricity generation and the
international electricity market price will be discussed. Third, the interaction of RES-E, conventional electricity generation and GHG-reduction with the three markets, for physical power, green certificates and emission trading will be analysis, i.e. it will be evaluated how new environmental markets, such as tradable emission allowances may affect or overlap with the promotion of RES. Special focus will be given on the effect of national GHG-reduction as well as on the effects for the producer and consumer, respectively. A number of policy recommendations in relation to the integration of the three markets and trade-offs between technologies and promotion schemes will be made.