Green Quota Research Articles

Ocena zielonych pul w budżetach obywatelskich w perspektywie wyzwań klimatycznych

The article presents results of the study of green quotas in participatory budgeting (PB), i.e. funds earmarked to finance environmentally beneficial projects. Those type of quotas were introduced in N = 17 or 6% of cities in Poland with more than 5,000 inhabitants, which organised PB between 2020 and 2022. On average, 10% of funds in participatory budgeting were allocated to projects within green quotas. In most cities “green” projects were defined most often as investments in green areas of cities or increasing the amount and quality of plants in city space. less frequently, the definition of “green” projects included small-scale retention and water management, organisation of events or care and protection of animals. The results of the analysis show the moderate effectiveness of green quotas. On average, 62% of their funds were allocated to investments concerning plants. however, the effectiveness of green quotas varied across cities. Some projects selected for implementation were “green” in name only. Rather than focus on improving the city environment, they entailed spending on new recreational infrastructure. Improving the functioning of green quotas requires tightening local regulations. it is also worth considering allowing a broader catalogue of tasks affecting the adaptation of cities to climate change, e.g. related to sustainable mobility or energy transformation.

The Economic and Climate Value of Flexibility in Green Energy Markets

This paper examines how enhanced flexibility across space, time, and a regulatory dimension affects the economic costs and CO_2 emissions of integrating large shares of intermittent renewable energy from wind and solar. We develop a numerical model which resolves hourly dispatch and investment choices among heterogeneous energy technologies and natural resources in interconnected wholesale electricity markets, cross-country trade (spatial flexibility), energy storage (temporal flexibility), and tradable green quotas (regulatory flexibility). Taking the model to the data for the case of Europe’s system of interconnected electricity markets, we find that the appropriate combination of flexibility can bring about substantial gains in economic efficiency, reduce costs (up to 13.8%) and lower CO_2 emissions (up to 51.2%). Regulatory flexibility is necessary to realize most of the maximum possible benefits. We also find that gains from increased flexibility are unevenly distributed and that some countries incur welfare losses.

The Economic and Climate Value of Flexibility in Green Energy Markets

This paper examines how enhanced flexibility across space, time, and a regulatory dimension affects the economic costs and CO2 emissions of integrating large shares of intermittent renewable energy from wind and solar. We develop a numerical model which resolves hourly dispatch and investment choices among heterogeneous energy technologies and natural resources in interconnected wholesale electricity markets, cross-country trade (spatial flexibility), energy storage (temporal flexibility), and tradable green quotas (regulatory flexibility). Taking the model to the data for the case of Europe's system of interconnected electricity markets, we find that the appropriate combination of flexibility can bring about substantial gains in economic efficiency, reduce costs (up to 13.8%) and lower CO2 emissions (up to 51.2%). Regulatory flexibility is necessary to realize most of the maximum possible benefits. We also find that gains from increased flexibility are unevenly distributed and that some countries incur welfare losses.

Producer incentives in electricity markets with green quotas and tradable certificates

We study both intended and unintended consequences of cost reductions by green producers in a competitive electricity market operated under a green quota enforced via a green certificate system. We show that green producers may not have an incentive to exploit the full cost reduction potential of their technology and can in general be expected to engage in strategic cost padding. We propose a method of incentivizing RE producers to exploit the full cost reduction potential of the green technology. The method allows for strategic cost padding, but only at the expense of profit reducing changes in the RE quota.

Grid Parity and Cost Reduction Incentives for “Green Producers” in Electricity Markets

In an electricity market, a feed-in tariff promotes attainment of a so-called “green quota” through a system of subsidies designed to ensure renewable energy investors a “normal rate-of-return”. However, the subsidies should track technological advances closely with the expectation that they will be phased out when the renewable technology reaches an appropriate “maturity threshold” (i.e., grid parity). Grid parity is typically defined as the point where the levelized cost of electricity equals the price of purchasing electricity from the grid. However, it has been recognized that this definition of grid parity is flawed due to the intermittent nature of many renewable resources. We propose a definition which allows us to distinguish between grid parity and least-cost grid parity. We demonstrate that under a green quota and an emissions cap, welfare may be higher if the policy maker forgoes least-cost grid parity and phases out the feed-in system sooner rather than later. We show that while green producer cost reduction incentives under the feed-in tariff are perverse, they can be restored by offering a “menu” of values of the policy variables and allowing full discretion in terms of the decision to engage in cost-padding, pure waste, etc.

Cost reduction incentives in electricity markets with overlapping regulations

Recent research has documented some potential unintended consequences of so called “overlapping regulations” in electricity markets. A primary example of these overlapping regulations are the emissions trading scheme and the various renewable energy (RE) support mechanisms currently employed in the EU to enforce a “green quota”. One common RE support mechanism is a system of premium feed-in tariffs. Under such a system, RE producers receive subsidies that are typically “generation cost based” but there is an expectation that as technological improvements in the RE production chain reduce costs, the subsidies will be eliminated as RE installations become competitive with fossil fuel producers. Therefore, one important component of the study of overlapping regulations is the analysis of the cost reduction incentives facing RE producers. To this end, we employ an example based on a stylized partial equilibrium model of a closed, competitive electricity market operated under both an emissions trading scheme and a green quota implemented via a system of premium feed-in tariffs. We demonstrate that there will always be one RE producer that has an incentive to both pad its own costs and attempt to disadvantage its rivals by increasing their costs. Moreover, we show that the total RE resource cost of meeting the emissions target and green quota are unaffected by cost reductions by RE producers. However, cost reduction incentives can be restored if the subsidies remain fixed for a “reasonable” period of time and the green quota is eliminated.

Incentives for cost reduction and cost padding in electricity markets with overlapping “green” regulations

We examine overlapping regulations in electricity markets. Using an example based on a stylized model of a competitive energy market, we study cost-reduction and cost-padding incentives by “green-energy” producers in an electricity market employing an emissions tax and the simultaneous use of a green quota for the generation portfolio and a fair rate-of-return constraint implemented via a system of feed-in tariffs. We show inter alia that when subsidies are phased out, exploitation of the green technologies full cost-reduction potential is a Nash Equilibrium but emissions will increase. In addition, green-energy producers can engage in collusive cost padding to increase profits even as they satisfy the policymaker's desired green quota.

Interactions of emission caps and renewable electricity support schemes

Over the last decades many OECD countries have implemented green quotas, feed-in tariffs, or feed-in premiums to promote electricity production from renewable energy sources (RES-E). More recently, these RES-E policies are overlaid with emission caps to reduce \(\hbox {CO}_2\) emissions. In this paper we investigate how emission caps change the electricity market outcome of pre-existing support schemes for renewable electricity production: with a green quota RES-E production declines, while it remains constant for feed-in tariffs, and expands for feed-in premiums; across all three RES-E policies an emission cap drives up the consumer electricity price with the price increase being lowest for the case of feed-in premiums; the economic adjustment cost to emission caps on the other hand turn out to be highest for pre-existing feed-in premiums, followed by feed-in tariffs and green quotas.

Green promotes the dirtiest: on the interaction between black and green quotas in energy markets

Tradable black (CO2) and green (renewables) quotas gain in popularity and stringency within climate policies of many OECD countries. The overlapping regulation through both instruments, however, may have important unintended consequences. Based on theoretical analysis we show that a green quota imposed on top of a black quota promotes power production by the dirtiest technologies as compared to a black quota regime only.

Combining bottom-up and top-down

We motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions. The complementarity format permits an energy-economy model to combine technological detail of a bottom-up energy system with a second-best characterization of the over-all economy. Our primary objective is pedagogic. We first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom-up activity analysis into a top-down representation of the broader economy. We then provide a stylized numerical example of an integrated model — within both static and dynamic settings. Finally, we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries: nuclear phase-out, green quotas, and environmental tax reforms.

Green plot ratio: an ecological measure for architecture and urban planning

Current research on sustainability of cities has favoured the implementation and conservation of greenery in the urban context. The benefits of plants are not just environmental but recreational, aesthetic and emotional. The full benefits of plants and the role they play in the ecology of cities remain to be mapped out but the general significance of plants appears to be uncontested. This paper proposes a new architectural and planning metric for greenery in cities and buildings. This new metric, the green plot ratio (GPR), is based on a common biological parameter called the leaf area index (LAI), which is defined as the single-side leaf area per unit ground area. The green plot ratio is simply the average LAI of the greenery on site and is presented as a ratio that is similar to the building plot ratio (BPR) currently in use in many cities to control maximum allowable built-up floor area in a building development. GPR allows more precise regulation of greenery on site without excluding a corresponding portion of the site from building development. It provides flexibility to the designer while simultaneously protecting the green quota in the design. This concept has been applied in a number of design competitions in which the author has collaborated with colleagues and various architectural practices. It has also been adopted as a planning requirement by the client authority for one of the competitions for which the author has entered. While seen as a fundamental and important metric, GPR is not in itself an indicator for all the ecological relationships between plants and cities. A larger set of related metrics need to be developed.

Simultaneous attainment of energy goals by means of green certificates and emission permits

We discuss the analytical effects of introducing emission permits and green certificates and the corresponding quotas as regulatory mechanisms to, respectively, reduce emissions from electricity production and ensure a certain deployment of renewable energy. The different case studies in this paper show that both instruments can be used in order to reach an emission goal or a goal of renewable energy. However, the combination of these instruments and the way they are used, is shown to be important for the price faced by consumers. It is shown that the effect on the consumer price is not an unambiguous increase with the introduction of a green quota. There is a choice between quotas leading to a lower consumer price and quotas leading to a higher consumer price. As a result of this it is shown that it is always optimal to reach a renewable energy deployment goal by the use of green certificates. However, to reach an emission goal it is sometimes most favourable, with respect to consumer prices, to use green certificates and sometimes to use emission permits.