Effects of Introducing Green Energy Certificates to a Competitive Energy Market

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bachelor_Nagal_Yash_2024.pdf (657.46 KB)

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School of Business | Bachelor's thesis
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Date

2024

Department

Taloustieteen laitos

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Mcode

Degree programme

Bachelor’s programme in Economics

Language

en

Pages

30

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Abstract

Climate change is a detrimental and worsening problem in today’s world. An effective way to tackle climate change is to decarbonise the energy sector by transitioning from brown energy to green energy. This thesis examines the en-ergy price and consumption effects of introducing green energy certificates alongside a government imposed green energy quota in competitive energy markets. Through theoretical modelling and empirical analysis, this thesis finds that implementing such a policy has both subsidy and tax-like effects on green and brown energy producers respectively. This is different to some of the other policy mechanisms in place today, such as the cap-and-trade system or carbon pricing, as not only is brown energy production being disincentivised, but green energy production is also further being incentivised. The price and consumption effects of this policy are ambiguous. However, modelling variations in the gov-ernment mandated quota is useful in determining an optimal policy decision which balances both climate objectives and economic efficiency.

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Thesis advisor

Stryjan, Miri

Keywords

energy markets, green energy certificates, renewable energy, policy

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https://urn.fi/URN:NBN:fi:aalto-202501191426

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[kand] Kauppakorkeakoulu / BIZ (Open Access)