Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
995528 | Energy Policy | 2013 | 7 Pages |
•Green certificates are the main renewable electricity policy instrument in Sweden.•Green certificates cover only a small share of total RES-E production.•Increasing certificate coverage improves efficiency, but leaves windfall rent.•Municipalities veto socially desirable RES-E projects.•We propose market-based building permits as a solution to this NIMBY problem.
Green certificates are the main instrument for promoting renewable electricity (RES-E) in Sweden. But certificates cover only a limited share of total RES-E production. Under partial coverage, crowding out may arise whereby costly new RES-E replaces inexpensive old RES-E. Granting certificates to all of RES-E production improves efficiency, but leaves windfall rent to otherwise profitable facilities. We also analyze transaction costs in the permit process for new RES-E in Sweden. Municipalities veto socially desirable projects because of asymmetrically distributed investment costs and benefits. We propose market-based permit fees rather than limited veto rights as a solution to this NIMBY problem.