When renewable portfolio standards meet cap-and-trade regulations in the electricity sector: Market interactions, profits implications, and policy redundancy
• Lowering the CO2 C&T cap might penalize renewable units, and increasing the RPS level could sometimes benefit coal and oil and make natural gas units worse off. • Making one policy more stringent would weaken the market incentive, which the other policy relies upon to attain its intended policy target. • The market‐wise average emissions could increase when increasing RPS requirement.
