Conditions for the Cost Effective Combination of Emissions Trading and Renewable Energy Support Policies

This paper makes a case for using cost effectiveness (as opposed to efficiency) as key criterion when designing support policies for electricity generation from renewable energy sources in coexistence with an emissions trading scheme. Using the EU ETS and the German feed-in tariff system as examples, arguments against a stand-alone ETS are presented and necessary conditions for cost-effective support to RES-E in a deep decarbonization context are synthesized.