Synergistic effects of carbon cap-and-trade and renewable portfolio standards on renewable energy diffusion

Abstract

Carbon cap-and-trade mechanisms (CCT) and renewable portfolio standards (RPS) have been identified as effective administrative instruments for steering the conduct of electricity generation and promoting the adoption of renewable energy sources. However, the synergistic effects of these policies are often overlooked, and static implementation can limit their effectiveness. To address these gaps, this study employs a dynamic CCT and RPS framework, utilizing complex network evolutionary game theory to examine their influence on renewable energy diffusion. The findings reveal a distinct synergy between CCT and RPS in enhancing renewable energy diffusion, although these policies may occasionally result in redundancy or conflict. A static CCT combined with a dynamic RPS demonstrates greater efficacy in promoting renewable energy diffusion, while a dynamic CCT does not consistently increase renewable energy adoption. Additionally, renewable energy quota standards facilitate higher levels of diffusion. In perfectly competitive markets, renewable energy diffusion is more effective than in monopolistic environments. These insights offer valuable policy suggestions for stimulating renewable energy diffusion and expediting high-quality, low-carbon transitions.