Article ID: | iaor20113541 |
Volume: | 39 |
Issue: | 4 |
Start Page Number: | 1975 |
End Page Number: | 1987 |
Publication Date: | Apr 2011 |
Journal: | Energy Policy |
Authors: | Pahle Michael, Fan Lin, Schill Wolf-Peter |
Keywords: | coal, natural gas markets, public policy, emissions |
We study how early emission certificate allocations in Germany distort fossil investments. We examine the role of windfall profits in the overall profitabilities of a new hard coal compared to a natural gas plant. We find that technology specific grandfathering over any period does not induce a change in preferences away from hard coal. Natural gas would have been preferred under auctioning or a technology neutral allocation though.