• Energy Research

Abstract In this paper, we analyze the rationale for an energy policy mix when the European Emissions Trading Scheme (ETS) is considered from a public choice perspective. That is, we argue that the economic textbook model of the ETS implausibly assumes (1) efficient policy design and (2) climate protection as the single objective of policy intervention. Contrary to these assumptions, we propose that the ETS originates from a political bargaining game within a context of multiple policy objectives. In particular, the emissions cap is negotiated between regulators and emitters with the emitters' abatement costs as crucial bargaining variable. This public choice view yields striking implications for an optimal policy mix comprising RES supporting policies. Whereas the textbook model implies that the ETS alone provides sufficient climate protection, our analysis suggests that support for renewable energies (1) contributes to a more effective ETS-design and (2) may even increase the overall efficiency of climate and energy policy if other externalities and policy objectives besides climate protection are considered. Thus, our analysis also shows that a public choice view not necessarily entails negative evaluations concerning efficiency and effectiveness of a policy mix.

There is an increasingly vocal debate on potential long-term changes in environmental sustainability spurred by the global COVID-19 pandemic. This article scrutinizes the social science basis of selected popular hypotheses regarding the nexus between the COVID-19 pandemic and the societal transitions towards environmental sustainability. It presents results that were derived through an interdisciplinary dialogue among social scientists. First, it is confirmed that the COVID-19 crisis has likely created a potential window of opportunity for societal change. Yet, to ensure that societal change is enduring and actually supporting the transition towards environmental sustainability, a clear and well-targeted political framework guiding private investments and behavior is required. Second, it is emphasized that there are important structural differences between the COVID-19 crisis and environmental crises, like time scales. Consequently, many strategies used to address the COVID-19 crisis are hardly suitable for long-term transitions towards environmental sustainability. Third, it is argued that transitions towards environmental sustainability—building both on reducing environmental degradation and building socio-techno-ecological resilience—may create co-benefits in terms of preventing and coping with potential future pandemics. However, research still needs to explore how big these synergies are (and whether trade-offs are also possible), and what type of governance framework they require to materialize.

Due to land use effects, bioenergy use may cause adverse effects on biodiversity, soil and water and may even fail to guarantee a GHG emissions reduction compared to fossil fuel use. Accounting methodologies and policy instruments were elaborated to prevent these effects, but there is still no sound and consensual methodology to take into account indirect land use change that substantially contributes to GHG emissions as well as a loss of biodiversity. While the iLUC hypothesis, that is the potentiality of adverse effects arising from indirect land use change related to biomass cultivation, is hardly subject to dispute, the quantification of these effects and especially their policy implications are however contentious. Hence, bioenergy policies worldwide face a dilemma: Neglecting iLUC effects that do in fact exist or taking them into account although no sound methodology is available? The article covers the current state of the discussion and also analyses the approaches developed for taking indirect land use change into account. Assessment criteria for coping with the iLUC dilemma are developed and policy recommendations are derived from that.

In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change.

Tanker water markets (TWM) supply water services in many urban areas, including those unconnected to public infrastructures. Notwithstanding, they have been associated with outcomes in conflict with sustainability goals of water policy, e.g., through inequitable and unaffordable supply or by contributing to groundwater overexploitation. So far, the literature dedicated to TWM has primarily conducted case studies embedded in diverse local contexts, which impedes the comparison and transfer of insights. In this article, we systematically summarize existing empirical knowledge on TWM and assess to what extent normative claims about the impacts of TWM on sustainability goals are supported by evidence. We use the concept of sustainable access, which combines notions of what constitutes access to water and what characterizes sustainable supply of services. The available evidence suggests that TWM have two key functions in urban water systems: (1) They provide services at otherwise unavailable levels, particularly with respect to the temporal availability and spatial accessibility of the service, and (2) they extend access to areas without or with low-quality network supply, typically low-income communities on the fringe of cities. From the perspective of sustainable access, we find that TWM can provide high service levels and thus fill a specific gap in the landscape of urban water services. Due to comparatively high prices, however, it is unlikely that these services are affordable for all. The combination of heterogeneous access to cheaper (subsidized) piped water and marginal pricing in TWM results in allocation outcomes that are not coherent with existing notions of equitable access to water. However, there is little convincing evidence that TWM necessarily result in unsustainable water use. The literature indicates that urban water governance in the studied areas is frequently characterized by a lack of effective institutions, which impedes the regulation or formalization of TWM.

Sustainability policies based on the economic rationale of providing incentives to get prices right inevitably place a significant burden on society and often raise distributional concerns. The social acceptability of Germany’s energy transition towards more sustainable generation and usage of energy is frequently the subject of such critical appraisals. The discourse centres upon the burden imposed on electricity users as a result of the promotion of renewable energy sources in the electricity sector in accordance with the German Renewable Energy Sources Act (EEG). A regressive EEG surcharge is suspected of driving up energy prices unreasonably and of being socially unjust. It is also argued that high-income utility owners profit from the EEG system at the expense of low-income electricity consumers (redistribution from bottom to top). The aim of this paper is to examine the validity of these two hypotheses and to show that both exhibit substantial theoretical and empirical weaknesses, with climate and environmental policy being played off against social policy in a questionable manner. At the same time, the article points out remaining conflicts between energy policy and social policy and makes corresponding policy recommendations for their resolution, thus contributing to reconciling distributional concerns arising in the context of incentive-oriented sustainability governance.

The German energy transition repeatedly faces harsh critiques questioning its economic and environmental merits. This article defends the energy transition and argues that Germany has chosen an economically efficient and particularly forceful approach to securing a sustainable energy supply. Though current expenditures are high, the long-term benefits of transforming the energy system to a renewables-based system are likely to outweigh present investment costs. Furthermore, support policies for renewables are not redundant-as some critics claim-but instead complement other policy instruments, such as the emissions trading scheme. This article also addresses the motives behind the discrediting attacks on the German energy policy regime. Defensive actions by beneficiaries of the former energy market structure are only to be expected, but the attacks from liberal economists are astonishingly fierce.