Environmental Engineering Reference
In-Depth Information
Of course, it might be argued that the EU ETS allowance price has been too low
and volatile. But this is exactly the point: it has been too low because, apart from
the economic crisis, countries were relatively generous in the allocation of allow-
ances in order to mitigate the economic burden on their own
rms [
32
,
33
]. Political
economy considerations and the institutional path dependency approaches suggest
that CO
2
prices are unlikely to be set at a suf
ciently high level to trigger (radical)
low-carbon innovation,
8
as shown by the low EU ETS allowance price in the
rst
and second commitment periods.
9
High carbon prices are unlikely to be politically
feasible since a national hard climate policy is politically unpro
table, i.e., it does
not help to win votes and may lead to loss of competitiveness and leakage by the
country adopting such a policy.
The above does not argue against the use of a carbon price to trigger the
development and diffusion of low-carbon technologies. It is a necessary albeit not
suf
cient element in the required policy mix. A carbon price can not cover
everything and can not address all relevant externalities. Policies to speci
cally
support the innovation and deployment of renewable energy technologies might be
justi
ed taking into account the aforementioned three externalities.
However, policy combinations are not a panacea and bring problems of their
own. They may lead to policy interactions between them, which might be positive
or negative. One example of a negative interaction (con
ict) might be the case of
ETS and renewable energy support (see [
35
] for further details).
2.2 Technology Neutrality Should Be Aimed at
2.2.1 The Usual Claim
Somehow related to the previous point, some authors argue in favor of
“
technology-
neutral policies
, i.e., instruments which may lead to the choice of the cheapest
technologies. It is claimed that, since governments do a poor job in
”
“
picking
winners
. Government
failure may lead to lock-in in inappropriate, expensive or simply bad technologies.
This argument has been used to criticize direct public support to the deployment of
renewable energy technologies (see, e.g., [
36
]).
”
, the choice of technologies should be left to
“
market forces
”
8
For an overview of these approaches applied to climate change mitigation and low-carbon
technologies, see del R
o and Labandeira [
34
].
9
During the
rst compliance period (2005
í
2007), the EU allowance price reached a peak near 30
-
€
in February 2007 and remaining at such level for the
rest of 2007. In the second compliance period (2008
in mid 2006, declining gradually to near 0
€
in
early 2008 and then stabilized at around 15
€
for most of the rest of the period, declining to around
8
€
by the end of it.
-
2012), the price reached a peak near 30
€
Search WWH ::
Custom Search