We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables like wind or solar, and storage. We determine optimal subsidies for renewables and storage capacities when carbon pricing is imperfect. This policy is...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables like wind or solar, and storage. We determine optimal subsidies for renewables and storage capacities when carbon pricing is imperfect. This policy is...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables whose availability varies continuously over time, and storage. A Pigouvian tax implements the first-best solution. This is also the case for an...

Energy system and power market models refrain from distinguishing between private and social discount rates. We devise a strategy to account for diverging private and social discount rates in intertemporal optimization frameworks, resulting in an optimal carbon tax above the marginal damage when...

Current decarbonization policies neglect damages from local air pollutants. We analyze the trade-off between complementary taxation of carbon emissions and local air pollution. We quantify results for the European power market until 2050. Taxing only air pollution results in social cost of 5,890...

We use the cross-impact balance analysis to develop narratives that differ in the level of political collaboration (in terms of the stringency of the EU climate policy) and physical collaboration (possible expansion of transmission capacity between countries) in the European power market....

Current policies focus on reducing CO2 emissions, neglecting the existence and impact of other air pollutants such as NO2, NH3, NMVOC, PPM10, PPM2.5, and SO2. We devise a strategy to model those emissions and related social cost accounting for diverging social and private discount rates in an...

We conduct a hybrid scenario exercise to analyze decarbonization pathways of the European power market and related distributional effects across countries as well as between consumers and producers. Our CIB analysis reveals qualitative scenarios that differ in the level of political (stringency...